Benzinga | May 17, 2021 10:06AM EDT

Earnings Preview: Home Depot

On Tuesday, May 18, Home Depot (NYSE:HD) will release its latest earnings report. Decipher the announcement with Benzinga's help.

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

Home Depot earnings will be near $3.07 per share on sales of $34.89 billion, according to analysts. Home Depot reported a profit of $2.08 per share when it published results during the same quarter last year. Sales in that period totaled $28.30 billion.

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.

The Wall Street estimate would represent a 47.6% increase in the company's earnings. Revenue would be have grown 23.29% from the same quarter last year. Home Depot's reported EPS has stacked up against analyst estimates in the past like this: Quarter Q4 2021 Q3 2020 Q2 2020 Q1 2020EPS Estimate 2.62 3.05 3.71 2.26EPS Actual 2.74 3.18 4.02 2.08Revenue Estimate 30.73 B 32.04 B 34.53 B 27.28 BRevenue Actual 32.26 B 33.54 B 38.05 B 28.30 B

Stock Performance

Shares of Home Depot were trading at $323.81 as of May 14. Over the last 52-week period, shares are up 34.24%. Given that these returns are generally positive, long-term shareholders are probably happy going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Home Depot is scheduled to hold the call at 09:00:00 ET and can be accessed here.