Investors were disappointed with the weak earnings posted by CECO Environmental Corp. (NASDAQ:CECO ). Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.
The Impact Of Unusual Items On Profit
For anyone who wants to understand CECO Environmental's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$4.5m due to unusual items. 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. Assuming those unusual expenses don't come up again, we'd therefore expect CECO Environmental 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 CECO Environmental's Profit Performance
Unusual items (expenses) detracted from CECO Environmental's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that CECO Environmental's statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into CECO Environmental, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of CECO Environmental.
Today we've zoomed in on a single data point to better understand the nature of CECO Environmental'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. 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 with significant insider holdings to be useful.
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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.
