The market seemed underwhelmed by last week's earnings announcement from Energizer Holdings, Inc. (NYSE:ENR) despite the healthy numbers. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.
How Do Unusual Items Influence Profit?
To properly understand Energizer Holdings' profit results, we need to consider the US$168m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Energizer Holdings to produce a higher profit next year, all else being equal.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On Energizer Holdings' Profit Performance
Unusual items (expenses) detracted from Energizer Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think Energizer Holdings' earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Energizer Holdings as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Energizer Holdings you should be mindful of and 1 of these makes us a bit uncomfortable.
This note has only looked at a single factor that sheds light on the nature of Energizer Holdings' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
