Axalta Coating Systems Ltd.'s (NYSE:AXTA) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.
The Impact Of Unusual Items On Profit
For anyone who wants to understand Axalta Coating Systems' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$103m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Axalta Coating Systems 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 Axalta Coating Systems' Profit Performance
Because unusual items detracted from Axalta Coating Systems' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Axalta Coating Systems' earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To that end, you should learn about the 2 warning signs we've spotted with Axalta Coating Systems (including 1 which shouldn't be ignored).
This note has only looked at a single factor that sheds light on the nature of Axalta Coating Systems' profit. But there are plenty of other ways to inform your opinion of a company. 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.
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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.