First Call Makes Room for GAAP-Based Earnings Forecasts

First Call, a leading information provider for investors, announced it will modify its earnings tracking system to accommodate forecasts provided in accordance with U.S. generally accepted accounting principles (GAAP).

Currently, First Call tracks only profit forecasts prepared on the basis of operating earnings, a measure that excludes one-time items such as profits from selling a business unit. These forecasts are aggregated into a so-called "consensus" number that provides some investors with a useful benchmark for gauging corporate performance. But others say the system can be overly simplistic, placing too much emphasis on a single number and causing investors to buy or sell securities based on whether a company makes or misses its forecast.

In the future, First Call will accept alternative bases of earnings, following the lead of Merrill Lynch's analysts, who now use a variety of metrics including GAAP-based earnings and related ratios and benchmarks. Merrill is believed to be the first big investment firm to adopt formal standards as a way to ease mounting investor frustration with the lack of generally accepted analytical techniques. This change reflects the growing importance of analysts in the financial reporting process and accompanying accusations that the firm was publishing overly bullish and biased stock reports.

In addition to the analysts' GAAP forecasts, First Call will also disseminate companies' actual GAAP earnings. Chuck Hill, First Call's director of research, said it will take some time for technicians to put the technology in place, but he expects the service will be available within a few months.

-Rosemary Schlank

You may like these other stories...

Cybersecurity is no longer the domain of an organization's IT staff. It's moved to the boardroom, and in a big way. Accountants and financial managers may have been thinking it's just the province of the tech...
You probably don't want to think about how many times you access the File menu in Excel 2010 or 2013. Personally I think Excel 2010 has the best possible File menu arrangement, other than having Print Preview grafted...
Following other recent high-profile hacking events, investigators discovered yesterday that hackers broke into the draft work paper files of several famous CPA firms. Revealing images of the scantily clad documents have been...

Already a member? log in here.

Upcoming CPE Webinars

Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
Oct 30
Many Excel users have a love-hate relationship with workbook links. For the uninitiated, workbook links allow you to connect one Microsoft Excel spreadsheet to other spreadsheets, Word documents, databases, and even web pages.