All of the good news coming for the large companies has the financial regulators scrutinizing how public firms are reporting their earnings.
All companies publically traded must use generally accepted accounting principles for their financial reports. But under special circumstances they are allowed to deviate and they can also use alternative methods that strip out certain items. In many cases, those alternatives methods leave out some one-time costs and result in rosier profit figures.
Last year, more than 90% of firms listed in the S&P 500 used some non-GAAP methods.
The Securities and Exchange Commission has sent out hundreds of letters to companies that report both GAAP and non-GAAP figures. But as you would suspect, the agency has yet to take any legal action.
But the notices have gotten the attention of some of the larger companies, they are changing their method to an all GAAP method versus the alternative accounting methods.
Among those who have modified their accounting methods: Alphabet, Facebook, Amazon and Microsoft.
Now has Wall Street taken notice and changed valuations?