Shareholders appeared unconcerned with Louisiana-Pacific Corporation's (NYSE:LPX) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Louisiana-Pacific's profit was reduced by US$60m, 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. 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. If Louisiana-Pacific 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 Louisiana-Pacific's Profit Performance
Unusual items (expenses) detracted from Louisiana-Pacific's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Louisiana-Pacific's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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 Louisiana-Pacific, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Louisiana-Pacific you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of Louisiana-Pacific's 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.