Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Core Earnings

What it is:

Core earnings are the net income a company generates from the principle products and services it provides.

How it works (Example):

The concept of core earnings was developed by Standard & Poor's (S&P) in order to measure the income a company generates from its daily operations. In this respect, core earnings include income generated by a company's production operations, advertising campaigns and issuance of securities. Core earnings exclude such factors as gains from a firm's portfolio and pension plan, capital gains from asset sales and any income derived from a brief project.

To illustrate, suppose Company XYZ produces watches. Company XYZ's core earnings will derive from revenue generated by the process of manufacturing the watches, XYZ's effort to advertise the watches and the sale and servicing of the securities it issued to raise money to maintain watch-making operations.

Why it Matters:

Core earnings reflect income generated by what could be called "business-as-usual." Because it excludes any one-time events or market fluctuations, it can be a better indicator of a company's earnings performance across numerous accounting periods.

Related Terms View All
  • Minimum Margin
    When a trader engages in trading on margin, the margin account must contain at least $2,...
  • Saitori
    Saitori are similar to specialists in the New York Stock Exchange. They match up brokers...
  • Hazard Insurance
    Let's say John Doe borrows $100,000 to buy a house. Company XYZ lends him the money and...
  • Delivery Price
    Upon the expiration of a futures contract, the underlying commodity is delivered to the...
  • Secular Market
    Let's say the United States experiences a massive terror attack on its own soil, similar...