Shareholders appeared to be happy with Cushman & Wakefield plc's (NYSE:CWK) solid earnings report last week. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.
How Do Unusual Items Influence Profit?
Importantly, our data indicates that Cushman & Wakefield's profit was reduced by US$61m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If Cushman & Wakefield doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
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 Cushman & Wakefield's Profit Performance
Because unusual items detracted from Cushman & Wakefield's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Cushman & Wakefield's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Cushman & Wakefield as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Cushman & Wakefield you should be mindful of and 1 of these bad boys doesn't sit too well with us.
This note has only looked at a single factor that sheds light on the nature of Cushman & Wakefield's 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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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.
