Novartis's Earnings Outlook

Novartis NVS announces its next round of earnings this Tuesday, January 26. Here is Benzinga's look at Novartis's Q4 earnings report.

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

Analysts expect Novartis earnings of $1.36 per share. Revenue will likely be around $12.87 billion, according to the consensus estimate. In the same quarter last year, Novartis reported earnings per share of $1.32 on revenue of $12.40 billion.

Why Analyst Estimates And Earnings Surprises Are Important

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 3.03% increase in the company's EPS figure. Revenue would be up 3.77% from the same quarter last year. The company's reported EPS has stacked up against analyst estimates in the past like this:

Stock Performance

Over the last 52-week period, shares are up 1.76%. Given that these returns are generally positive, long-term shareholders can relax 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. Novartis is scheduled to hold the call at 09:00:00 ET and can be accessed here.