Core Earnings

What are 'Core Earnings'

Core earnings are the revenue derived from a company's main or principal business, less all expenses and revenue from non-core activities. Core earnings represents earnings associated with business operations, and exclude earnings from goodwill, gains or losses from nonrecurring items, pension gains, legal settlements or employee stock options.

BREAKING DOWN 'Core Earnings'

Accounting statements typically contain earnings associated with normal business activities, as well as those associated with nonrecurring or side items. This can make it difficult to determine if the company's stock value is based on solid earnings or gimmicks. For example, a car manufacturer's main business is producing vehicles. All revenue and expenses associated with the production of cars would be included in the core earnings. Financing schemes, development of non-automobile parts or engines, maintenance of pension funds, and real estate interests would be omitted from the core earnings figure.

RELATED TERMS
  1. Nonrecurring Charge

    An entry that appears on a company's financial statements for ...
  2. Operating Earnings

    Profit earned after subtracting from revenues those expenses ...
  3. Operating Profit

    The profit earned from a firm's normal core business operations. ...
  4. Accounting Earnings

    The amount of money a company has earned during a given period, ...
  5. Core Assets

    An essential, important or valuable property of a business without ...
  6. Forward Earnings

    A company's forecasted, or estimated, earnings made by analysts ...
Related Articles
  1. Options & Futures

    Core Earnings Strip Away "Creative" Accounting

    This metric is an attempt to counteract creative accounting, but it poses its own set of challenges.
  2. Economics

    What are Earnings?

    The amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year.
  3. Investing

    IBM Stock: An Earnings Case Study

    Learn the main drivers behind IBM's earnings model and why analysts predict a decline in 2016 followed by a strong recovery in 2017.
  4. Personal Finance

    6 Things To Look For In Earnings Reports

    Learn how to consider all the known variables when assessing a company's health.
  5. Options & Futures

    Financial Statements: Earnings

    By David Harper (Contact David)In this section, we try to answer the question, "what earnings number should be used to evaluate company performance?" We start by considering the relationship ...
  6. Professionals

    What are Core Competencies?

    Core competencies are the essence of what a company does well. A business uses its core competencies to make and develop products, goods and services according to its company mission. Core competencies ...
  7. Investing

    Operating Profit

    Operating profit is the profit generated from the core business of a company before accounting for interest and taxes.
  8. Stock Analysis

    Spin Control

    Politicians are known for spin control, but public companies also try to shed the best light on results by using nuanced language.
  9. Fundamental Analysis

    The Financial Characteristics Of A Successful Company

    There are many factors that contribute to a profitable business. Find out what they are here.
  10. Markets

    The Most Important Metrics For Earnings Season

    Knowing how to read an earnings report can help investors decide which stocks to buy.
RELATED FAQS
  1. How rapidly can expanding sales reduce a firm's earnings?

    In order to operate and make money, a company must spend money. Revenue - the dollar amount of sales - can be seen on a company's ... Read Answer >>
  2. What is earnings management?

    Before diving into what earnings management is, it is important to have a solid understanding of what we mean when we refer ... Read Answer >>
  3. What types of revenue are taxable?

    Learn about all the various types of taxable corporate revenue and how different revenues are designated and differentiated ... Read Answer >>
  4. What is the difference between earnings and income?

    See how earnings and income are different and when they are used in relation to personal finance versus a business' financial ... Read Answer >>
  5. What are examples of key operating activities in a company?

    Discover the things that make up a company's operating activities, including examples of some the key operating activities ... Read Answer >>
  6. When is earnings season?

    Earnings season is the period of time during which a large number of publicly traded companies release their quarterly earning ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center