Smallest Difference Between Non-GAAP EPS and GAAP EPS for DJIA Since 2016

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 Q2 2018. What percentage of these companies reported non-GAAP EPS for Q2 2018? What was the median difference between non-GAAP EPS and GAAP EPS for companies in the DJIA for Q2 2018? How did this difference compare to recent quarters?
Company Breakdown

For Q2 2018, 23 (or 77%) of the 30 companies in the DJIA reported non-GAAP EPS in addition to GAAP EPS for the second quarter. Since Q1 2016, 71% of companies in the DJIA have reported non-GAAP EPS in addition to GAAP EPS on average. Of these 23 companies, 14 (or 61%) reported non-GAAP EPS that exceeded GAAP EPS. Since Q1 2016, 79% of companies in the DJIA have reported non-GAAP EPS that exceeded GAAP EPS on average. The second quarter marked the lowest number of companies in the DJIA reporting non-GAAP EPS that exceeded GAAP EPS since FactSet began actively tracking this metric for the DJIA in Q1 2016.

As a result, the median difference between non-GAAP EPS and GAAP EPS for all 23 companies was 5.4%. Since Q1 2016, the median difference between non-GAAP EPS and GAAP EPS has been 13.6%. Thus, the second quarter marked the lowest median difference between non-GAAP EPS and GAAP EPS since FactSet began actively tracking this metric for the DJIA in Q1 2016. The list of the nine companies in the DJIA that reported non-GAAP EPS that was lower than or equal to GAAP EPS can be found below. All metrics reflect GAAP EPS (and non-GAAP EPS) from continuing operations when provided.

DJIA: Q2 2018 Non-GAAP EPS Equal To or Below GAAP EPS (Source: FactSet)