Why Do Analysts Use eBay Non-GAAP EPS For Estimates?
by Timothy Phillips
Analysts have been widely inconsistent by accepting the use of some company's non-GAAP earnings per share accounting for estimates, such as eBay (EBAY) and Google (GOOG), and then holding other companies such as Apple (AAPL) and Amazon (AMZN) to a higher standard by using straight GAAP earnings for estimates. Using eBay as an example, their CY13 non-GAAP EPS estimate is 20% higher than the GAAP estimate. This translates into a 17% lower forward P/E estimate (currently 18.5 vs. 22.2) on all financial websites and discussions about the stock by writers and reporters. This 20% inflation of earnings is highly misleading and can lead to poor investment decisions/comparisons if the investor does not know the estimate is non-GAAP or what non-GAAP excludes vs. other securities. read more »
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