Benzinga January 2016 Earnings Accuracy Report
In the midst of earnings season, traders and investors are making significant decisions based on earnings numbers.
Wall Street compares actual figures to analyst estimates when giving companies a pass or fail – it’s a problem when the earnings numbers investors are being delivered aren’t accurate.
Santander’s earnings can serve as an example. The company reported GAAP earnings of $0.19 versus the $0.56 consensus. Both Reuters and Wall Street Horizon reported the GAAP number instead of the comparable figure, $0.37. The adjustment is due to $109 million of mark to market losses, which are not reflective of ongoing performance or included in estimates. Although the company still significantly missed earnings, the comparable number was 95% higher than most outlets reported.
Yelp is another example; several outlets reported Yelp’s earnings at $0.11 versus a -$0.03 estimate. In reality, the comparable figure used by sell side analysts is -$0.02.
Benzinga prides itself on taking the effort to produce the cleanest earnings figures possible. There are dozens of items which affect the comparability of company reported figures, including major asset impairments, discontinued business lines, one time tax credits, restructuring charges, etc.
Benzinga has been able to significantly increase its presence in the earnings space by achieving a high level of comparability. The process isn’t easy, but it is effective. That is why companies like Estimize, a social estimates company, use Benzinga to power their platform.