Benzinga | Jul 20, 2021 10:38AM EDT

Discover Financial's Earnings Outlook

Discover Financial (NYSE:DFS) releases its next round of earnings this Wednesday, July 21. Here is Benzinga's essential guide to Discover Financial's Q2 earnings report.

Net Income, Earnings, And Earnings Per Share

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Based on management's projections, Discover Financial analysts model for earnings of $3.75 per share on sales of $2.90 billion. Discover Financial EPS in the same period a year ago totaled $1.2. Sales were $2.66 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 412.5% increase in the company's earnings. Revenue would be up 8.94% from the year-ago period. The company's reported EPS has stacked up against analyst estimates in the past like this: Quarter Q1 2021 Q4 2020 Q3 2020 Q2 2020EPS Estimate 2.82 2.42 1.53 -0.28EPS Actual 5.04 2.59 2.45 -1.20Revenue Estimate 2.77 B 2.82 B 2.67 B 2.66 BRevenue Actual 2.79 B 2.82 B 2.71 B 2.66 B

Stock Performance

Shares of Discover Financial were trading at $116.72 as of July 19. Over the last 52-week period, shares are up 131.54%. Given that these returns are generally positive, long-term shareholders are probably satisfied going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Discover Financial is scheduled to hold the call at 08:00:00 ET and can be accessed here.