CoreCivic, Inc. (NYSE:CXW) recently posted some strong earnings, and the market responded positively. 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 CoreCivic's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$33m 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. 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 CoreCivic 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 CoreCivic's Profit Performance
Unusual items (expenses) detracted from CoreCivic's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that CoreCivic's statutory profit actually understates its earnings potential! And the EPS is up 19% over the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, CoreCivic has 4 warning signs (and 1 which can't be ignored) we think you should know about.
This note has only looked at a single factor that sheds light on the nature of CoreCivic'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.
