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Computerized Investing > Fourth Quarter 2013

Earnings per Share

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by CI Staff

As an individual investor managing your own stocks, you undoubtedly follow earnings closely, since these reported figures can greatly affect the price of a stock. Unfortunately, earnings are never straightforward and can be calculated several ways. In fact, depending on where you look for earnings data, there can be vastly different figures given for the same company. This is due to the fact that firms and analysts can treat the items used to calculate earnings differently.

You may have noticed that firms will often report several variations on their earnings figure. A standard set of accounting rules and procedures, known as GAAP (generally accepted accounting principles), applies when reporting earnings figures and compiling financial statements. U.S. companies must abide by GAAP, making it difficult for firms to report faulty figures and ensuring that earnings figures are comparable among all publicly traded firms.

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