Preview: Daqo New Energy's Earnings

Daqo New Energy DQ will be releasing its next round of earnings this Tuesday, May 18. For all of the relevant information, here is your guide for Tuesday's Q1 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

Sell-side analysts expect Daqo New Energy's EPS to be near $1.19 on sales of $297.97 million. In the same quarter last year, Daqo New Energy announced EPS of $2.57 on revenue of $168.83 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 Tuesday, EPS would be down 53.7%. Revenue would be up 76.49% on a year-over-year basis. Here is how the company's reported EPS has compared to analyst estimates in the past:

Stock Performance

Over the last 52-week period, shares are up 543.52%. Given that these returns are generally positive, long-term shareholders can be content going into this earnings release.

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