Synopsys Earnings Preview

Synopsys (NASDAQ:SNPS) unveils its next round of earnings this Wednesday, December 02. Here is Benzinga's everything-that-matters guide for the earnings announcement.

Net Income, Earnings, 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

Based on Synopsys management projections, analysts predict EPS of $1.57 on revenue of $1.03 billion. Synopsys EPS in the same period a year ago totaled $1.15. Revenue was $851.08 million.

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.

If the company were to report earnings in line when it publishes results Wednesday, earnings would be up 36.52%. Sales would be up 21.02% on a year-over-year basis. Synopsys's reported EPS has stacked up against analyst estimates in the past like this:

Stock Performance

Shares of Synopsys were trading at $227.5 as of November 30. Over the last 52-week period, shares are up 66.37%. Given that these returns are generally positive, long-term shareholders are probably happy going into this earnings release.

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