Benzinga | Feb 24, 2021 10:03AM EST

Earnings Preview for Applied Optoelectronics

Applied Optoelectronics (NASDAQ:AAOI) announces its next round of earnings this Thursday, February 25. Here is Benzinga's look at Applied Optoelectronics's Q4 earnings report.

Net Income, Earnings, And Earnings Per Share

Earnings and especially earnings per share (EPS) are useful measures of a company's profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.

Earnings And Revenue

Applied Optoelectronics EPS loss is expected to be around $0.23, according to sell-side analysts. Sales will likely be near $52.18 million. In the same quarter last year, Applied Optoelectronics posted a loss of $0.18 per share on sales of $48.66 million.

Why Analyst Estimates And Earnings Surprises Are Important

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

If the company were to report earnings in line when it publishes results Thursday, quarterly profit would be down 27.78%. Revenue would be up 7.24% on a year-over-year basis. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate -0.08 -0.25 -0.38 -0.23EPS Actual -0.06 -0.24 -0.44 -0.18Revenue Estimate 79.00 M 57.05 M 44.83 M 47.81 MRevenue Actual 76.61 M 65.22 M 40.47 M 48.66 M

Stock Performance

Shares of Applied Optoelectronics were trading at $11.4 as of February 23. Over the last 52-week period, shares are up 19.98%. Given that these returns are generally positive, long-term shareholders are probably content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Applied Optoelectronics is scheduled to hold the call at 16:30:00 ET and can be accessed here.