S&P Core Earnings

Similar to Buffett’s concept of “owners earnings”, core earnings attempts to reflect the true earnings from a corporation’s operation.  Non-recurring expenses like litigation fees and goodwill impairment are added back into earnings, however R&D expenditures, stock options expenses and depreciation of assets are still counted as expenses. Due to accounting needs, writeoffs and non-recurring charges may sometimes inflate or deflate a company’s results by a large amount, which may be a misleading indicators of the company’s core operations.

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