A new research report from Bear Stearns identifies the best earnings benchmarks by industry. GAAP earnings (earnings prepared according to generally accepted accounting principles) are cited as the best benchmarks for a few industries, but not many. Most use pro forma earnings or pro forma earnings per share (EPS).

Examples of the most useful earnings benchmarks for just a few of the 50+ industries included in the report:

• Autos: Pro forma EPS
• Industrial manufacturing: Pro forma EPS shifting to GAAP EPS
• Trucking: Continuing EPS
• Lodging: Pro forma EPS, EBITDA and FFO
• Small & mid-cap biotechnology: Product-related events, Cash on hand, Cash burn rate
• Advertising & marketing services: Pro forma EPS, EBITDA, Free cash flow
• Business/professional services: Pro forma EPS, Cash EPS, EBITDA, Discounted free cash flow
• Wireless services: GAAP EPS, EBITDA

EBITDA=Earnings before interest, taxes, depreciation and amortization.
FFO=funds from operations.

The report also lists the most common adjustments made to arrive at pro forma earnings and tells whether securities analysts consider the adjustments valid. Patricia McConnell, senior managing director at Bear Stearns, explains, "Analysts rarely accept managements' suggested 'pro forma' adjustments without due consideration, and sometimes we reject them... We would not recommend using management's version of pro forma earnings without analysis and adjustment, but neither would we blindly advise using GAAP earnings without analysis and adjustment."

Bear Stearns & Co. is a leading worldwide investment banking and securities trading and brokerage firm. For more information about the firm and the report, visit the company's Web site.

-Rosemary Schlank