GAAP Earnings’ Misleading Trend Continues In 2Q23

Seeing GAAP Earnings move in the opposite direction of Core Earnings raises red flags about the quality of reported earnings while also raising the risk of earnings misses in subsequent quarters. In other words, 3Q23 and 4Q23 earnings seasons could be ugly. These results underscore the more stable nature of Core Earnings. Because I remove unusual gains and losses, Core Earnings are not prone to the large swings seen in GAAP Earnings.

This report is an abridged version of All Cap Index & Sectors: GAAP Earnings’ Misleading Trend Continues in 2Q23, one of my quarterly reports on fundamental market and sector trends. Based on the latest audited financial data, which is the 2Q23 10-Q in most cases. Price data as of 8/15/23.