Continuing and discontinued operations

When a company sells or shuts down a major part of its business, it reports that part separately as discontinued operations. Everything the company keeps is reported as continuing operations.

The split lets investors see what the company will look like going forward. Earnings from continuing operations show the profit of the businesses that remain, while the results of the unit being sold, and any gain or loss on the sale, sit on a separate line below.

For valuation, earnings from continuing operations are usually the better starting point, since the discontinued unit will not contribute in future years. EPS is often reported both ways, so check which figure a ratio or headline number uses.