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CommonWealth REIT (NYSE:CWH)
Net Income
$-182.3 Mil (TTM As of Mar. 2014)

Net Income is the net profit that a company earns after deducting all costs and losses including cost of goods, SGA, DDA, interest expenses, non-recurring items and tax. CommonWealth REIT's net income for the three months ended in Mar. 2014 was $20.4 Mil. Its net income for the trailing twelve months (TTM) ended in Mar. 2014 was $-182.3 Mil.

Net Income is linked to the most popular earnings per share (EPS) number. CommonWealth REIT's diluted earnings per share (EPS) for the three months ended in Mar. 2014 was $0.08.


Definition

Net Income is the net profit that a company earns after deducting all costs and losses including cost of goods, SGA, DDA, interest expenses, non-recurring items and tax.

Net Income
= Revenue - Cost of Goods Sold - Selling, General, & Admin. Expense - Research & Development - Depreciation, Depletion & Amortization - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Earnings Before Depreciation and Amortization - Depreciation, Depletion & Amortization - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Operating Income - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Pre-Tax Income - Tax Expense + Others

CommonWealth REIT's Net Income for the fiscal year that ended in Dec. 2013 is calculated as

Net Income(A: Dec. 2013 )
=Pre-Tax Income+Tax Provision+Other Income (Minority Interest)+Net Income (Discontinued Operations)
=78.499+-2.634+-20.093+-232.832
=-177.1

CommonWealth REIT's Net Income for the quarter that ended in Mar. 2014 is calculated as

CommonWealth REIT Net Income for the trailing twelve months (TTM) ended in Mar. 2014 was 18.889 (Jun. 2013 ) + -216.315 (Sep. 2013 ) + -5.301 (Dec. 2013 ) + 20.448 (Mar. 2014 ) = $-182.3 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

Net income is the most widely cited number in reporting a company’s profitability. It is linked to the most popular earnings-per-share (EPS) number through:

CommonWealth REIT's Earnings Per Share (EPS) for the quarter that ended in Mar. 2014 is calculated as

Earnings Per Share (Q: Mar. 2014 )=(Net Income-Preferred Dividends)/Total Shares Outstanding
=(20.448-11.151)/118.400
=0.08

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Although Net Income and Earnings-per-Share (EPS) are the most widely used parameter in measuring a company’s profitability and valuation, it is the least reliable. The reason is that reported earnings can be manipulated easily by adjusting any numbers such as Depreciation, Depletion and Amotorization and non-recurring items.

EPS is most useful for companies that have:

• A predictable business
• Consistent accounting methods
• And few restructurings

The dividend paid to preferred stocks needs to be subtracted from the total net income in the calculation of EPS because common stock holders are not entitled to that part of the net income.


Be Aware

Warren Buffett looks for consistency and upward long term trend. Because of share repurchase it is possible for net earnings trend to differ from EPS trend. He preferred net income over EPS. The companies with durable competitive advantage companies report higher % net earnings to total revenues.

Important: If a company is showing net earnings history greater than 20% on total revenues, it is probably benefiting from a long term competitive advantage.

If net earnings is less than 10%, likely to be in a highly competitive business.


Related Terms

Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense, Research & Development, Depreciation, Depletion & Amortization, Interest Expense, Non-Recurring Items, Earnings Before Depreciation and Amortization, Operating Income, Pre-Tax Income, Tax Provision, Other Income (Minority Interest), Net Income (Discontinued Operations), Earnings Per Share, Total Shares Outstanding, Preferred Dividends


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

CommonWealth REIT Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Net Income 162.8165.0250.6124.3244.6164.7135.4110.0-95.4-177.1

CommonWealth REIT Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Net Income 14.923.716.117.6-152.825.718.9-216.3-5.320.4
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