OK, Home Depot you tricked us … but why?

HD drops on mixed earnings

An odd thing happened in the oft murky world of earnings reports. Home Depot's quarterly release is normally a light, even enjoyable read, but Tuesday morning's version was more like trying to figure out just what on earth the Beatles were saying in "I Am The Walrus."

The headline was profits of $1.15 per share, which is 2 cents above what analysts expected. The major news outlets (including CNBC) all trumpeted some form of "Home Depot beats estimates." Unfortunately, that's not how most analysts saw it. By 8 a.m. EST, at least six analysts had said Home Depot's profits were just $1.12, a 1-cent miss.

CNBC corrected its stories not too long after that, but the vast majority of websites are still going with "Home Depot Beat." As late as 11 a.m. EST, five hours after the news first came out, Dow Jones, Bloomberg, USA Today and the New York Times were still using the $1.15 EPS figure. Since then, Reuters and Bloomberg have updated their reports. So what happened?

Included in that $1.15 per share is a big profit from selling shares of HD Supply Holdings, a recent spinoff. The problem is Home Depot wasn't clear about the gain. Instead of giving an after-tax, per-share impact, Home Depot just said it had a pre-tax gain of $100 million.

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The odd thing is Home Depot posted a similar stock gain two quarters ago and was very clear about it in the earnings release:

"First quarter of fiscal 2014 results reflect a benefit to earnings, net of tax, of $61 million, or $0.04 per diluted share, related to the sale of a portion of the company's equity ownership in HD Supply Holdings, Inc."

So Home Depot put out an earnings release that is worse than their usual high standard and as a result has gotten better headlines than it probably deserved. Most analysts did figure it out. The earnings miss is certainly one reason why Home Depot shares were down by Tuesday's close. The problem is, small investors are getting misled.

"We apologize for any confusion. The HD Supply gain was clearly disclosed in our updated guidance provided on September 18 and reiterated today in our release, as was reflected in reports by analysts," Home Depot's Director of Corporate Communications, Stephen Holmes told CNBC.

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It's frustrating to think that Home Depot probably had dozens of people working for weeks on this report. Journalists have seconds or, if they're lucky, minutes to put together a headline.

Getting this straightened out took a good part of the morning and included issuing a correction, something no writer likes doing. I can't help but think of something John Lennon reportedly said while writing the far more opaque and wonderful "I Am The Walrus":

"Let the f****s work that one out!"