The sustainable earnings base provides earnings information from which the
distorting effects of nonrecurring items have been removed. Some analysts
refer to such revised numbers as representing “core” or “underlying” earnings.
Sustainable is used here in the sense that earnings devoid of nonrecurring
items of revenue, gain, expense, and loss are much more likely to be maintained
in the future, other things equal. Base implies that sustainable earnings
provide the most reliable foundation or starting point for projections of future
results. The more reliable such forecasts become, the less the likelihood that
earnings surprises will result. Again, Phillips Petroleum captures the essence
of nonrecurring items in the following:show more...