Companies Report More Conservative Pro-Forma Earnings
Here are the statistics:
- Altogether, 94% of S&P 500 companies have already reported second quarter earnings. Of these companies, Thomson First Call calculates that 214 reported GAAP earnings, 220 reported operating earnings, and 37 reported on a pro-forma basis.
- Of the companies that reported pro-forma earnings, Zacks Investment Research calculates that 39.3% came in above GAAP, a drop from 44.6% in first quarter.
- According to Thomson First Call, eleven S&P 500 companies have switched from pro-forma to GAAP since the beginning of the year.
Nick Raich, director of research at Zacks attributes the decline in the percentage of companies whose pro-forma earnings exceeded their GAAP earnings to a trend toward more conservative reporting practices.
"Many companies were pushing the envelope towards the end of the 1990s and early 2000s," explains Mr. Raich, "but we've noticed that there has been a shift towards companies becoming more conservative."