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Are the EPS values on the Growth, Profitability and Financial Rations on MartketWatch Adjusted for Inflation

Personal Finance & Money Asked by genghisjahn on January 10, 2021

Take this page: http://financials.morningstar.com/ratios/r.html?t=GM&region=usa&culture=en-US

Here we see a table showing financials for GM.

For the row called “Earnings Per Share USD” are the numbers in this row(or for that matter any row on this page) adjusted for inflation. Are those number in 2020 dollars or do I need to do the adjustment myself?

One Answer

You'll need to do the adjustment yourself.

Historical stock prices are not adjusted for inflation.

If you show historical EPS numbers of other data adjusted for inflation, investors would start comparing them to historical stock prices and would get strange results.

Also, investors would see a discrepancy between old annual reports of a company (that cannot be adjusted after publication, so adjusting for inflation is impossible) and old figures in these stock information websites.

If historical stock prices are not adjusted for inflation, the only sane thing to do is to show other data in unadjusted form as well. This approach also means the old data is consistent with old annual reports.

As a rule, you should always trust data only if you obtain it from its primary source. So, do not use these websites; look up the old annual reports of the companies. Sometimes, a new annual report can have some historical data too.

Answered by juhist on January 10, 2021

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