adjusted EBITDA and adjusted EBIT are commonly used items, useful for getting a picture of company operational performance. I’m surprised they haven’t been added before now.
I was wondering about this myself. @yuvaltaylor asked about it a few years ago. I suspect he has since found a solution. If so, perhaps we can sweet talk him into sharing it.
I’ve played around with the available line items, but I think it’d be best just to get the entry straight from FactSet.
These are not GAAP items. Companies adjust their EBITDA and EBIT however they see fit. There’s no one formula for it, so it’s really not comparable across companies. See Adjusted EBITDA | Definition + Calculation Example
I know its non-GAAP, but the analyst consensus values could be added, just as they have been with EPSActualQ. SharePad in the UK are able to provide this information for London-listed companies.
But what’s the use case? Let’s say we provided FactSet’s adjusted EBITDA. Every company adjusts its EBITDA differently. Would you compare one company’s adjusted EBITDA to that of other companies? Do you think it’s valid to do so? Is there any advantage to doing so rather than trusting the GAAP value of EBITDA, which is standardized across all companies? Moreover, FactSet offers this data only for S&P 1500 companies and only for the last three years . . .
As I understand it, EPSActualQ is the average of the normalized EPS calculated by analysts, so I’d expect the adjusted EBIT or EBITDA to be derived in the same way.
EPSActual is calculated by analysts, who try to be equally fair to all the companies they cover, while adjusted EBITDA is calculated by the companies themselves . . . So it’s not really the same. If you’re looking for normalized operating income, I’d suggest starting with normalized net income (current EPS estimate or most recent EPS actual multiplied by SharesQ) and adding back interest expenses and taxes paid. That’ll give you EBIT, which is the same as operating income. Does that sound good to you? That way you can calculate it for any company, not just the S&P 1500, and for any time period, not just the past three years.
Much more useful than this would be a line item for SBC, restructuring costs and other items you can use to adjust yourself. Many like depr, amortization are available anyway
Yuval,
EPSActual*SharesFD+IntExp+IncTaxExp
seems to produce a plausible result. It was less than the management-adjusted EBIT for the 3 companies I looked at, but perhaps this is OK. I haven’t found a source of analyst-adjusted EBIT values to check the numbers against.
I assume you meant SharesFD rather than Shares? Also, I’m not sure if IntInc should also be taken off. Its not part of the operating income, but it might be a regular source of income for the company.
thanks,
Dodge
Personally, I am uncertain whether analysts use Shares or SharesFD when calculating EPS.
I think you’re right that interest income should be subtracted too.