Investors eagerly anticipate earnings announcements each quarter to gain a crucial insight into how well a company is performing - but a global equity fund chief says it pays to be wary of the words that a business uses – not just its figures.
"It does tell you that there's something going wrong, I think, when people start reaching for the gobbledygook phrasebook," Terry Smith, CEO of Fundsmith with four decades' experience in finance, told CNBC Tuesday.
PepsiCo uses jargon when it came to job titles, according to Smith. He said the soft drinks maker – which holds third place in the U.S. sales rankings behind Coke and Diet Coke – had employed a "global beverage foresight director", a "head of hydration" and even a "head of enjoyment."
"Have they got a hindsight director? Someone who tells them what went wrong in the past," Smith said. "These are ridiculous titles. Why haven't they just got a head of sales who's charged with selling more Pepsi?"
PepsiCo declined to comment when contacted by CNBC.
Meanwhile, Wal-Mart, which posted disappointing quarterly sales in August and gave a cautious outlook, is also guilty of befuddling analysts, investors and onlookers, Smith said.
Smith - who admitted to not following the stock closely - explained that in a recent results presentation, Wal-mart's management team said "leverage" no less than 80 times. Leverage has a legitimate meaning, but Smith said this usage was a worrying sign that a company could be trying to hide something.
Charles Holley, executive vice president and chief financial officer for Wal-mart, said in the earnings presentation: "The productivity loop is top of mind across the organization, and we remain focused on delivering leverage for the company by year-end. Long-term strategic investments by our leverage services area pressured operating expense leverage during the past quarter, but we believe the benefits of these investments to our customers and shareholders outweigh the near-term impact on expenses."
"What's a productivity loop?" Smith asked. "Any idea what that means?"
In response Wal-Mart say that the terms "productivity loop" and "leverage" are not new and have been discussed extensively by the company as part of its financial priorities of growth, leverage and returns.
"The productivity loop allows us to manage our expenses so that we can invest in price and drive customers to our stores. It's a business model that has been successful for us," a spokesperson told CNBC.
"It starts with leverage. If we can leverage our expenses, it frees up cash for us to invest in price because we know that's a traffic driver in our business. As we're effectively able to lower prices, we drive traffic into our stores and that volume allows us to leverage our expenses."
—By CNBC.com's Matt Clinch. Follow him on Twitter .