Preview: Magic Software's Earnings

On Monday, March 08, Magic Software MGIC will report its last quarter's earnings. Here is Benzinga's preview of the company's release.

What Are Earnings, Net Income, 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

Wall Street analysts see Magic Software reporting earnings of $0.19 per share on revenue of $94.70 million. Magic Software EPS in the same period a year ago totaled $0.13. Revenue was $90.93 million.

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

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

The analyst consensus estimate would represent a 46.15% increase in the company's earnings. Revenue would be up 4.15% from the same quarter last year. Here is how the Magic Software's reported EPS has stacked up against analyst estimates in the past:

Stock Performance

For a full 12 months, the return has risen by 85.92%. 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. Magic Software is scheduled to hold the call at 10:00:00 ET and can be accessed here.