Oil-Dri Corporation of America (NYSE:ODC) recently posted some strong earnings, and the market responded positively. We have done some analysis, and we found several positive factors beyond the profit numbers.
See our latest analysis for Oil-Dri Corporation of America
The Impact Of Unusual Items On Profit
To properly understand Oil-Dri Corporation of America's profit results, we need to consider the US$5.6m expense attributed 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, after all, that's exactly what the accounting terminology implies. If Oil-Dri Corporation of America doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Oil-Dri Corporation of America.
Our Take On Oil-Dri Corporation of America's Profit Performance
Because unusual items detracted from Oil-Dri Corporation of America's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Oil-Dri Corporation of America's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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. If you'd like to know more about Oil-Dri Corporation of America as a business, it's important to be aware of any risks it's facing. For example - Oil-Dri Corporation of America has 1 warning sign we think you should be aware of.
This note has only looked at a single factor that sheds light on the nature of Oil-Dri Corporation of America's 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. 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.
