About a third of S&P 500 companies this month have reported their latest quarterly earnings, and the results are frustrating and murky for several stocks, financial website MarketWatch reports.
“Even as the Securities and Exchange Commission steps up its efforts to make companies produce clean, easily understood earnings, companies are ignoring best-practice conventions in the way numbers are presented,” according to MarketWatch’s analysis. “The regulator issued updated guidelines on that practice last May and has followed up with comment letters to offenders.”
Some companies try to divert investor attention away from unflattering information, while others highlight earnings that don’t adhere to generally accepted accounting principles. The SEC does allow some leeway to alter earnings for corporate mergers, layoffs and “extraordinary” events, but companies can become dependent on adjustments year after year.
General Electric Co., the manufacturing giant that is one of 30 companies in the Dow Jones Industrial Average, and tech behemoth International Business Machines Corp. used their quarterly report to highlight diluted earnings per share greater than basic EPS.
“It’s fairly unusual that a company is reporting diluted EPS before basic EPS,” Urooj Khan, an associate professor of business at Columbia Business School, told MarketWatch. “There’s nothing wrong with it. But it’s interesting why they are making the choice to be different from the majority of other companies.”
The method to calculate basic EPS is by using the weighted-average number of common shares for the period, while diluted earnings include all the potential common shares, such as exercised options. Diluted EPS typically are smaller than basic EPS.
“An unknowing investor might at first glance conclude that earnings per share were greater than actual bottom-line earnings,” MarketWatch says.
The SEC has sent comment letters asking for clearer reports from GE, General Motors Co., Coca-Cola Co., Hertz Global Holdings Inc., Medtronic PLC, Whirlpool Corp. and Tesla Motor Inc.
“In response to the May guidance, companies adopted changes in the way they present non-GAAP metrics, especially in the area of the ‘prominence’ and ‘reconciliation,’ ” Olga Usvyatsky, a CPA who is vice president of research at Audit Analytics, told MarketWatch. “But there is still work to be done to achieve full compliance.”
Bank of America Merrill Lynch on Monday provided analysis of the first three weeks of earnings season through last week.
Bottom-up earnings per share for the large-cap companies in the S&P 500 climbed to $31.12 from $30.93 “now 1 percent above what analysts had been expecting in January and below our forecast of $31.25,” according to a report by Savita Subramanian, head equity strategist at BofA, obtained by Newsmax Finance. “Earnings growth is tracking +5 percent year over year on sales growth of +3.9 percent year over year, both up from last quarter.”
Technology and healthcare have been the strongest industries for the fourth-quarter earnings season, while energy companies have reported weaker-than-estimated results, according to BofA.
© 2026 Newsmax Finance. All rights reserved.