Fortune (July 5)
“In a note on Tuesday” Bank of America “analysts reaffirmed their year-end price target of 7,100 for the broad market index, representing a 5% drop from the week’s closing level.” Citing “extreme levels” of speculation, BoA believes the market is poised for a “snapback,” also noting “that S&P 500 companies are generating less free cash flow relative to net income compared to historical trends. That’s as so-called hyperscalers have seen their free cash flow plunge due to massive spending on the AI boom, eroding their earnings.”
Tags: AI boom, Analysts, BoA, Broad market, Earnings, FCF, Historical trends, Hyperscalers, Index, Net income, Note, Price target, S&P 500, Snapback, Speculation, Spending
Barron’s (June 23 Issue)
“Non-GAAP numbers were to be used judiciously to explain extenuating or extraordinary circumstances, like a factory fire or the sale of a division.” Instead, they’ve become endemic. “For fiscal 2024, some 351 companies in the S&P 500 index, or 71%, reported either non-GAAP net income or non-GAAP earnings per share.” Of those, 89% of the adjustments made “their results look better” and the difference can be vast. “Intel had the biggest adjustment last year.” With “a GAAP loss of $19.2 billion” the chipmaker “categorized $18.6 billion as nonrecurring, so it reported a non-GAAP loss of $600 million.” And the sleight of hand can be performed year after year. For example, Oracle “has booked a restructuring charge every year for the past five years.” Especially in tech and healthcare, “non-GAAP numbers are now more accepted than the ‘generally accepted’ ones.”
Tags: Adjustments, Endemic, EPS, Extenuating, Extraordinary circumstances, Factory fire, Healthcare, Intel, Loss, Net income, Non-GAAP, Nonrecurring, Oracle, Restructuring, Results, S&P 500, Tech
Forbes (February 28, 2012)
U.S. banks “took in nearly $120 billion in net income last year, the most since 2006, but that doesn’t mean they are back in their glory days.” What’s the problem? “Banks can’t seem to increase their top line numbers.” Profits are stemming from layoffs, cost cutting and loss provisions. “Banks are having a tough time making money off the loans they make.” Net operating revenue has actually dropped during three of the last four quarters and “full-year net operating revenue declined for only the second time since 1938.”U.S. banks “took in nearly $120 billion in net income last year, the most since 2006, but that doesn’t mean they are back in their glory days.” What’s the problem? “Banks can’t seem to increase their top line numbers.” Profits are stemming from layoffs, cost cutting and loss provisions. “Banks are having a tough time making money off the loans they make.” Net operating revenue has actually dropped during three of the last four quarters and “full-year net operating revenue declined for only the second time since 1938.”
Tags: Banks, Loans, Loss provisions, Net income, Operating revenue, U.S.
