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Mind the GAAP

As we close the earnings season for 4Q23, we continue to see differences between sales and earning per share. The top line growth has slowed down significantly from prior quarters, and the bottom line is “manufactured” to please the market. Proof of that is the chart below: it shows the median difference between Non-GAAP and GAAP (generally accepted accounting principles) compliant earnings per share. There is more than a 30% difference between both. Periodically and cyclically, companies use “adjustments” that deviate from the norm, and that typically coincide with the end of the cycle, where tight valuations push the C-suite to be creative in order to meet analysts expectations.


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