This report provides case studies for exactly how we perform the detailed Core Earnings to Net Income Reconciliation for the following companies:
- General Motors (GM)
- Fortive (FTV)
- Newell Brands (NWL)
- Exelixis (EXEL)
- ExpresSpa Group (XSPA)
- Navidea (NAVB)
- Cesca Therapeutics (THMO)
These case studies (available for Pro and above clients only) show the original source data used to perform all of our calculations and adjustments. They allow clients to audit our work. We provide original values and locations in the filings for all the data.
GAAP earnings don’t tell the whole story of a company’s profits. They are based on accounting rules originally designed for debt investors, not equity investors, and are often manipulated by companies to manage earnings.
Core Earnings[1] measure the normalized operating profitability of a business. Accordingly, when calculating Core Earnings, analysts should strip out any gains/losses that are non-core, non-operating, or unusual. The problem for legacy firms and analysts is that identifying unusual items has become increasingly difficult.
We leverage our Robo-Analyst technology to analyze all the disclosures in the footnotes and MD&A. In doing so, we provide a “novel database” that enables investors to overcome the inaccuracies, omissions, and biases of legacy fundamental datasets. This more reliable and proprietary data, proven in The Journal of Financial of Economics, drives our data and research.
Clients can audit all of the unusual items used in our calculations in the Marked-Up Filings section of each of our Company Valuation models. We are 100% transparent about what goes into our research because we want investors to trust our work and see how much goes into building the best earnings quality and valuation models.
Figure 1 shows the detailed reconciliation for Cesca Therapeutics (THMO).
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