Before the fourth quarter earnings reports started rolling in, Societe General analyst Andrew Lapthorne warned that investors were in for a surprise and that profits growth wasn’t nearly as strong as people were expecting. Now that the results are in, and net income was up 14% for the S&P 500 (INDEXSP:.INX) (12.8% ex-financials), you’d be forgiven for expecting Lapthorne to be eating his words. In fact, he stands by them.
2012 write-downs distort 2013 reporting
“We do not like to overly focus on pro-forma earnings beyond using them as an indicator of earnings momentum,” writes Lapthorne. “However ultimately it is growth in cash flow or operating earnings that in our view influences future investment and dividend payments.”
He argues that the net income...
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