Look-Through Earnings

“What were the real earnings? Like…to evaluate how well or poorly the company is doing—and what price per share we should be paying for their stock—we have to look through this one time blip wherein Russia ordered 140,000 Putin Love Dolls. Yes, they blow up. They’re snuggly. Women and roughly 10% of men wanted them.

So the company made them and sold them. But this number was a blip. Putin dolls won’t be hot forever, even if the politician is. So if we look through this one blip, which contributed a buck a share in earnings, then the $1.40 a share in total that the company printed wasn’t actually all that good. Without the blip, the Street had expected 65 cents. We have to look through those one-ish time events in earnings. Maybe a Trump doll next year changes things. Maybe not.