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In this edition of The Dividend Wealth Journal, David Trainer uncovers how inflated earnings may be distorting the true value of S&P 500 stocks

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Dividend Wealth Journal: Street Earnings Overstated for 74% of S&P 500 in 2Q24 David Trainer here. Today, we're diving into the first of a two-part look at how Street Earnings — those earnings numbers you see in mainstream financial reports — may be giving investors a skewed perspective on S&P 500 profitability. Our research reveals that for 74% of the S&P 500 companies, Street Earnings are actually overstated, making companies appear more profitable than they truly are. In this report, we’re going to explore just how widespread and significant these earnings overstatements are, what they mean for your investments, and which company stands out as the biggest offender. — David Trainer Street Earnings, as reflected in Zacks Earnings, are marketed as being adjusted to remove unusual income and charges. Our Core Earnings show Street Earnings fail to account for a material amount of unusual income and charges, which distorts investors’ view of profitability across the S&P 500. This report shows:   • the prevalence and magnitude of overstated Street Earnings in the S&P 500, • that Street Earnings (and GAAP earnings) are flawed and not adjusted as promised, and • the S&P 500 company with the most overstated Street Earnings and a Very Unattractive Stock Rating.   210 S&P 500 Companies Overstate EPS by More than 10% For 369 companies in the S&P 500, or 74%, Street Earnings are higher than Core Earnings[2] for the trailing-twelve-months (TTM) ended 2Q24. In the TTM ended 1Q24, 373 companies overstated their earnings. When Street Earnings are higher than Core Earnings, they are overstated by an average of 19%, per Figure 1.   The 369 companies with overstated Street Earnings make up 66% of the market cap of the S&P 500 as of 8/15/24, which is down from 71% in the TTM through 5/16/24. Note that this analysis is based on our team analyzing the financial statements and footnotes for ~3,000 10-Ks and 10-Qs filed with the SEC after earnings season. We estimate that the cost of this work for most firms would be over $2 million each quarter. To say the least, there is tremendous value in our rigorous analysis of these filings across so many companies so that our clients can discern the best and worst stocks with unrivaled diligence.   For over a third of the S&P 500 (210 companies), Street Earnings are overstated by more than 10% vs. Core Earnings. These 210 companies make up 27% of the market cap of the S&P 500 as of 8/15/24. See Figure 3.   The Worst Offender in the S&P 500 Figure 4 shows the S&P 500 stock with the most overstated Street Earnings (Street Distortion as a % of Street Earnings per share) over the TTM through 2Q24 and a Very Unattractive Stock Rating. “Street Distortion” equals the difference between Core Earnings per share and Street Earnings per share. Investors using Street Earnings miss the true profitability, or lack thereof, of these businesses.   That’s it for today. The lesson here? Don’t take those headline earnings at face value — chances are they are painting too rosy a picture. Meanwhile, our deep-dive data cuts through the noise to reveal the true profitability of each company. Be sure to check back for Monday’s newsletter, where I’ll share insights on the undervalued side of the earnings misrepresentation equation. You won’t want to miss this if you’re looking for an overlooked opportunity. — David Trainer P.S. Nate Tucci’s targeting huge returns from tiny moves in the underlying stock. Check out his breakthrough strategy here.

Dividend Wealth Journal: Street Earnings Overstated for 74% of S&P 500 in 2Q24 David Trainer here.   Today, we're diving into the first of a two-part look at how Street Earnings — those earnings numbers you see in mainstream financial reports — may be giving investors a skewed perspective on S&P 500 profitability.   Our research reveals that for 74% of the S&P 500 companies, Street Earnings are actually overstated, making companies appear more profitable than they truly are.   In this report, we’re going to explore just how widespread and significant these earnings overstatements are, what they mean for your investments, and which company stands out as the biggest offender.   — David Trainer Street Earnings, as reflected in Zacks Earnings, are marketed as being adjusted to remove unusual income and charges. Our Core Earnings show Street Earnings fail to account for a material amount of unusual income and charges, which distorts investors’ view of profitability across the S&P 500. This report shows:   the prevalence and magnitude of overstated Street Earnings in the S&P 500, that Street Earnings (and GAAP earnings) are flawed and not adjusted as promised, and the S&P 500 company with the most overstated Street Earnings and a Very Unattractive Stock Rating.     210 S&P 500 Companies Overstate EPS by More than 10%   For 369 companies in the S&P 500, or 74%, Street Earnings are higher than Core Earnings[2] for the trailing-twelve-months (TTM) ended 2Q24. In the TTM ended 1Q24, 373 companies overstated their earnings.   When Street Earnings are higher than Core Earnings, they are overstated by an average of 19%, per Figure 1.   The 369 companies with overstated Street Earnings make up 66% of the market cap of the S&P 500 as of 8/15/24, which is down from 71% in the TTM through 5/16/24.   Note that this analysis is based on our team analyzing the financial statements and footnotes for ~3,000 10-Ks and 10-Qs filed with the SEC after earnings season. We estimate that the cost of this work for most firms would be over $2 million each quarter. To say the least, there is tremendous value in our rigorous analysis of these filings across so many companies so that our clients can discern the best and worst stocks with unrivaled diligence.   For over a third of the S&P 500 (210 companies), Street Earnings are overstated by more than 10% vs. Core Earnings. These 210 companies make up 27% of the market cap of the S&P 500 as of 8/15/24. See Figure 3.   The Worst Offender in the S&P 500   Figure 4 shows the S&P 500 stock with the most overstated Street Earnings (Street Distortion as a % of Street Earnings per share) over the TTM through 2Q24 and a Very Unattractive Stock Rating. “Street Distortion” equals the difference between Core Earnings per share and Street Earnings per share. Investors using Street Earnings miss the true profitability, or lack thereof, of these businesses.   That’s it for today.   The lesson here? Don’t take those headline earnings at face value — chances are they are painting too rosy a picture.   Meanwhile, our deep-dive data cuts through the noise to reveal the true profitability of each company.   Be sure to check back for Monday’s newsletter, where I’ll share insights on the undervalued side of the earnings misrepresentation equation. You won’t want to miss this if you’re looking for an overlooked opportunity.   — David Trainer   P.S. Nate Tucci’s targeting huge returns from tiny moves in the underlying stock. Check out his breakthrough strategy here.

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions. Unsubscribe This email was sent to diansastroxz.forex@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions. Unsubscribe This email was sent to diansastroxz.forex@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub