Benzinga | Nov 3, 2020 10:04AM EST

Fitbit's Earnings: A Preview

Fitbit (NYSE: FIT) announces its next round of earnings this Wednesday, November 04. Here is Benzinga's everything-that-matters guide for this Wednesday's Q3 earnings announcement.

What Are Earnings, Net Income, 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

Fitbit EPS loss is expected to be around $0.12, according to sell-side analysts. Sales will likely be near $298.20 million. Fitbit reported a loss of $0.1 when it published results during the same quarter last year. Sales in that period totaled $347.20 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.

The analyst consensus estimate would represent a 20.0% decrease in the company's earnings. Sales would be down 14.11% from the same quarter last year. Fitbit's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q2 2020 Q1 2020 Q4 2020 Q3 2019EPS Estimate -0.22 -0.16 0.03 -0.1EPS Actual -0.12 -0.24 -0.12 -0.1Revenue Estimate 189.00 M 265.99 M 523.21 M 345.26 MRevenue Actual 261.27 M 188.16 M 502.14 M 347.20 M

Stock Performance

Shares of Fitbit were trading at $7.04 as of November 02. Over the last 52-week period, shares are down 0.14%. Given that these returns are generally negative, long-term shareholders are probably a little upset going into this earnings release.

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