Adjusted Earnings

Adjusted earnings are a company’s earnings figure after specified items are added to or removed from a standard accounting result. For U.S. companies, an adjusted earnings measure is often a non-GAAP measure whose definition can differ by company.

A simple example

Suppose a company reports GAAP earnings of $1.50 per share and adds back a specified $0.30 per-share expense in its reconciliation. It reports adjusted earnings of $1.80 per share. The investor still needs to judge whether that expense is unusual and whether the same adjustment is used in other periods.

Why this matters to income investors

An adjustment may help explain ongoing performance, but it can also exclude costs that matter or recur. The label alone does not show what changed. Compare the company’s stated adjustments with the most directly comparable GAAP earnings measure.

How to use adjusted earnings in your research

Record the source, earnings basis, adjustments, and period. Use the same basis across periods when reviewing dividend coverage or earnings yield. If a comparable adjusted measure is unavailable, identify any use of GAAP earnings clearly. Do not assume an unlabeled earnings figure is adjusted.

This material is general education and information, not individualized investment, tax, or legal advice.