This question is around Chapter 14 in the Intelligent Investor (Stock Selection for the Defensive Investor). I've read the chapter and I've read blog posts about it. I'm confused. What's confusing me is the lack of specifics when reviewing a company's income statements and balance sheets.

For example, #3 in Graham's book -- Earnings Stability -- states that "Some earnings for the common stock in each of the past ten years."

Okay, how does one find that? If I look at the income statement for AAPL for example, there are eight fields for EPS (e.g., Diluted EPS Excluding Extraordinary Items, Basic Normalized EPS, Diluted Normalized EPS, and more). Witness:

snapshot of the balance sheet

Which one should I be looking at?

1 Answer 1


In the Income Statement that you've linked to, look for the line labeled "Net Income". That's followed by a line labeled "Preferred Dividends", which is followed by "Income Available to Common Excl. Extra Items" and "Income Available to Common Incl. Extra Items". Those last two are the ones to look at. The key is that these lines reflect income minus dividends paid to preferred stockholders (of which there are none here), and that's income that's available to ordinary shareholders, i.e., "earnings for the common stock".

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