Reporting multiple Earnings Per Share numbers – General Electric is not alone

On the recent Q3 earnings call, General Electric [GE] pledged to simplify adjusted EPS (Earnings Per Share) numbers that are being reported to investors. Among other things, Jamie Miller, the incoming CFO of GE, plans to move off reporting industrial and vertical EPS and to conform the GE definition of free cash flow to industry-standard.1 

I’m also reevaluating our metrics and reporting and I’ll take you through that in more detail on November 13. But as some examples, we’ll be moving off of the industrial and verticals EPS reporting. We will conform the GE definition to the industry-standard on free cash flow. And we’re really looking at — how can we report in a much cleaner way, just a much simpler presentation of what you see? I’d kind of call it a back-to-the-basics approach: consistency and transparency, but with data that you can digest. And I want your feedback here, but that’s the target

On the November 13th call, GE reiterated its intent to change the presentation of both non-GAAP EPS and Cash Flow to better align with industry practices.

The move comes after receiving steady criticism from investors who argued that GE’s reporting is overly complex and, in some cases, too difficult to understand. 2 3 4  The earnings release dated October 20th provided four distinct EPS metrics, reporting earnings of $0.21, $0.22, $0.26, and $0.29.

EPS from Continuing Operations of $0.22 (GAAP); bottom-line EPS of $0.21 (GAAP); Industrial Operating + Vertical EPS of $0.29 (non-GAAP) and Operating EPS of $0.26 (non-GAAP).5

Let’s take a step back and think about why GE needed to use four different metrics in the first place. In GE’s case, the accounting and business complexities  are strongly correlated. Some would argue that the complexity was one of the major contributing factors that hurt GE’s performance. Removing the Industrial Operating + Vertical metric will, for sure, provide a more user-friendly presentation, yet to streamline the business operations years of restructuring efforts will be needed.

While it is not uncommon for large companies to use adjusted earnings that deviate from generally accepted accounting principles, it is uncommon for companies to present multiple adjusted EPS metrics.

According to our analysis, 96% of S&P 500 companies use at least one non-GAAP metric, and 355 companies (or 71%) present at least one non-GAAP EPS metric. In addition to EPS, non-GAAP presentation may include metrics such as Free Cash Flow or Adjusted EBITDA.

Alternatively, only 6% of S&P 500 companies use more than one non-GAAP EPS metric. Listed below are the five largest S&P 500 companies (by market cap) that presented two or more EPS metrics.

As we can see from the table, many of the companies with multiple metrics exclude impact of the foreign currency. Other companies used adjustments such as hedging and amortization of intangibles.

Presentation of multiple non-GAAP metrics is not prohibited, and in many cases, it might actually be helpful in clarifying the underlying business. Still, in our mind, the important takeaway is that the number of metrics used could provide a good gauge of the underlying complexity.

Non-GAAP data is available for purchase as part of Audit Analytics’ Exploratory Research. Our analysts engage in this research to help better understand current and developing market conditions, and track the latest disclosure trends and regulations as they impact financial reporting. 

For a complete list of companies that used multiple non-GAAP EPS metrics or for additional non-GAAP information, email us at or call (508) 476-7007.

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