Adjusted EPS adjusts EPS for non-recurring items. For many companies, Adjusted EPS is the most important metric that drives stock price.
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Hi Guys! Awesome job with the course. i’m really enjoying it.
Just wanted to check that when you guys were calculating the adjusted EPS in the example, you said $1.120/100 = 1.12$ but it actually is $11.2.
Thanks for pointing this out Humberto! You are correct. We’ll get this fixed the next time around when we revise all the courses.
Super happy to hear that you’re enjoying the courses so far!
Hi,
When i have been looking at stocks financials i have noticed that sometimes the reported EPS and normalised are different including when i calculate it. Why is this the case?
Also would you count interest as non recurring payment?
Thanks
Hi Luke, Interest is technically a recurring expense (because a company will continue to bear interest for as long as they owe debt). Public companies have a whole bunch of non-recurring extraordinary expenses embedded in different lines within the Income Statement. As a result, they often provide a “Reconciliation” or “Bridge” from GAAP EPS to Non-GAAP (“Normalized” or “Adjusted”) EPS. In these reconciliations, they’ll break out the smaller items that are embedded within lines like R&D, SG&A, COGS. As a result, you can’t get to their normalized EPS calculating it on your own without that additional set of information breaking… Read more »