I would like to get better at converting EPS to Adj EPS. I have several companies that don’t report Adj EPS and I always feel that I don’t have as good a handle on the value for them as I do for my stocks that report Adj earnings. There is stock based compensation but then there are other profits and expenses that need to be adjusted. For instance, if a company sells a building for a gain then that gain which contributed to earnings (but it is not relevant to the future operating income) should be backed out. Similarly, if a company such as INVN has a one time $15M legal expense then that should be added back.
For US, you suggested adding back 65% of the share based compensation. Why did you choose 65% of the expense? How did you come up with that number (maybe something with their tax rate?)? Would that 65% hold for all the past quarters (I would need to go back and make adjustments for at least the past 4 quarters to can an accurate P/E based on adj EPS)? .
Then what other items would I make adjustments to?
Now regarding UA, I’ve been thinking of selling my remaining shares for a while. Tax considerations have been one reason I’ve not pulled the trigger. Also, not having an accurate adj EPS number has held me back too.