In calculating underlying earnings or EPS, if there are non-recurring items viz 1) gain on sale 2) extraordinary expenses, how should they be treated?
in general, you should get rid of those and adjust accordingly (non-recurring expense will then increase EPS and gain on sale of asset will then reduce EPS)
analysts are mostly interested in “core EPS” or EPS arising from core/general business activities related to the firm’s main industry/operations. EPS from investments or other income are perceived as unsustainable and unpredictable and therefore, unforeseeable.
however, if some of these non-recurring items continue to show up consecutively for a significant amount of years (let’s say 10 years), then it’s safe to assume that they are “recurring items” and you should forecast these as well.