How Much Did Non-GAAP EPS Exceed GAAP EPS for the Dow 30 in Q3?

While all publicly traded U.S companies report EPS on a GAAP (generally accepted accounting principles) basis, many U.S. companies also choose to report EPS on a non-GAAP basis. There are mixed opinions in the market about the use of non-GAAP EPS. Supporters of the practice argue that it provides the market with a more accurate picture of earnings from the day-to-day operations of companies, as items that companies deem to be one-time events or non-operating in nature are typically excluded from the non-GAAP EPS numbers. Critics of the practice argue that there is no industry-standard definition of non-GAAP EPS, and companies can take advantage of the lack of standards to exclude items that (more often than not) have a negative impact on earnings to boost non-GAAP EPS.

As of today, all of the companies in the Dow Jones Industrial Average (DJIA) have reported actual EPS for Q3 2019. What percentage of these companies reported non-GAAP EPS for Q3 2019? What was the median difference between non-GAAP EPS and GAAP EPS for companies in the DJIA for Q3 2019? How did these differences compare to recent quarters?

For Q3 2019, 20 (67%) of the 30 companies in the DJIA reported non-GAAP EPS in addition to GAAP EPS for the third quarter. Since 2016, 73% of companies in the DJIA have reported non-GAAP EPS in addition to GAAP EPS on average. Of these 20 companies, 14 (70%) reported non-GAAP EPS that exceeded GAAP EPS. Since 2016, 75% of companies in the DJIA reported non-GAAP EPS that exceeded GAAP EPS on average. The median difference between non-GAAP EPS and GAAP EPS for all 20 companies was 7.7%. Since 2016, the median difference between non-GAAP EPS and GAAP EPS has been 10.9%.

Thus, the number of companies in the DJIA reporting non-GAAP EPS, the number of companies reporting non-GAAP EPS exceeding GAAP EPS, and the median difference between non-GAAP EPS and GAAP EPS for Q3 2019 were all slightly below the average (or median) quarterly numbers since 2016.

DJIA: Top Five Non-GAAP EPS > GAAP EPS for Q3 2019