Guide · Markets

Adjusted vs. Reported Earnings: Why One Company Can Post Two Different Profits

Bank of America earned 91 cents a share in the third quarter of 2026 — or $1.08, depending on which line you read. Here is the difference between reported and adjusted earnings, and how to tell which one the market is reacting to.

Oct 15, 2026

Most large companies publish two versions of their profit. Reported earnings follow the official accounting rules (GAAP in the US) and include everything that happened in the quarter. Adjusted earnings, often called non-GAAP or "core" earnings, remove items the company considers unusual, so that one quarter can be compared fairly with another.

The items usually taken out fall into a few groups: legal settlements and regulatory fines; restructuring costs such as layoffs or plant closures; gains or losses from selling investments or businesses; write-downs of assets; and, at some companies, the amortisation of intangible assets acquired in takeovers.

The third-quarter 2026 bank results showed how far apart the two numbers can be. Bank of America reported earnings of $0.91 a share, but $1.08 excluding a regulatory charge of about $1.2 billion. JPMorgan reported $5.57, or $5.75 without a $658 million loss on securities sales. Johnson & Johnson was the extreme case: reported earnings of $0.09 a share against adjusted earnings of $2.59, because of a one-time charge of about $5.5 billion linked to its proposed talc litigation settlement.

Analysts almost always forecast adjusted earnings, so the beat-or-miss headline you see on results day compares adjusted with adjusted. That is why Johnson & Johnson could "beat" with a reported profit of nine cents. It is also why the headline can mislead: Bank of America's adjusted $1.08 was only slightly below the roughly $1.10 expected, yet the stock fell 4.76%, because the charge was real cash and revenue also missed.

Adjusted numbers are useful but they are chosen by the company. In the US, a company that publishes them must also show the reported figure and a table reconciling the two. Three questions are worth asking: Do the "one-time" items keep appearing every year? Does the company exclude costs, such as stock-based pay, that are a normal part of running the business? And is the gap between reported and adjusted earnings getting wider over time?

A practical routine on results day: read the adjusted number to see how the business did against expectations, then read the reported number and the reconciliation to see what it cost. If the two keep diverging, the reported number is usually closer to what shareholders actually earn.