Benzinga | Mar 3, 2021 10:34AM EST

Earnings Preview: Broadcom

On Thursday, March 04, Broadcom (NASDAQ:AVGO) will report its last quarter's earnings. Here is Benzinga's preview of the company's release.

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

Broadcom EPS is expected to be around $6.55, according to sell-side analysts. Sales will likely be near $6.61 billion. Broadcom EPS in the same period a year ago totaled $5.25. Sales were $5.86 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

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 match the consensus estimate, earnings would be up 24.76%. Revenue would be up 12.84% from the same quarter last year. Here is how the company's reported EPS has stacked up against analyst estimates in the past:

Quarter Q4 2020 Q3 2020 Q2 2020 Q1 2020EPS Estimate 6.25 5.24 5.14 5.34EPS Actual 6.35 5.40 5.14 5.25Revenue Estimate 6.43 B 5.76 B 5.69 B 6.00 BRevenue Actual 6.47 B 5.82 B 5.74 B 5.86 B

Stock Performance

For a full 12 months, the return has risen by 73.38%. Given that these returns are generally positive, long-term shareholders are probably relaxed going into this earnings release. Long-term shareholders are already enjoying 12-month gains prior to the announcement.

Do not be surprised to see the stock move on comments made during its conference call. Broadcom is scheduled to hold the call at 17:00:00 ET and can be accessed here.