The market was pleased with the recent earnings report from Winnebago Industries, Inc. (NYSE:WGO), despite the profit numbers being soft. We think that investors might be looking at some positive factors beyond the earnings numbers.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Winnebago Industries' profit was reduced by US$36m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Winnebago Industries 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 Winnebago Industries' Profit Performance

Because unusual items detracted from Winnebago Industries' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Winnebago Industries' earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the 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. So while earnings quality is important, it's equally important to consider the risks facing Winnebago Industries at this point in time. In terms of investment risks, we've identified 3 warning signs with Winnebago Industries, and understanding them should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Winnebago Industries' profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.