U.S. Markets closed

It’s Funny How Companies See Clearly Without GAAP in Their Eyes

Stephen Gandel
It’s Funny How Companies See Clearly Without GAAP in Their Eyes

For instance, Newell Brands Inc., maker of a household goods such as Sharpie markers and Rubbermaid containers, forecasts that a key measure of its income, which the company calls “normalized earnings per share,” could rise slightly to as much as $2.85 this year from $2.75 in 2017. Newell’s actual earnings, as defined by Generally Accepted Accounting Principles, or GAAP, will almost certainly plunge. Sales of its Graco strollers have been hit by the Toys “R” Us bankruptcy, a key distribution outlet, and the company is divesting some of its other brands. Newell’s management, despite being able to forecast its favored normalized EPS metric as well as operating cash flow, says it’s unable to predict what its actual bottom line could be and even states that doing so would mislead investors.