Earnings Preview: Hollysys Automation

On Thursday, May 13, Hollysys Automation HOLI will release its latest earnings report. Benzinga's outlook for Hollysys Automation is included in the following 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

Hollysys Automation EPS is expected to be around $0.44, according to sell-side analysts. Sales will likely be near $94.64 million. Hollysys Automation EPS in the same period a year ago totaled $0.23. Revenue was $80.77 million.

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

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.

If the company were to post earnings in line with the consensus estimate when it reports Thursday, EPS would be up 91.3%. Revenue would be up 17.18% on a year-over-year basis. Hollysys Automation's reported EPS has stacked up against analyst estimates in the past like this:

Stock Performance

Shares of Hollysys Automation were trading at $13.77 as of May 11. Over the last 52-week period, shares are down 4.9%. Given that these returns are generally negative, long-term shareholders are likely a little upset going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Hollysys Automation is scheduled to hold the call at 21:00:00 ET and can be accessed here.