The market seemed underwhelmed by the solid earnings posted by Pactiv Evergreen Inc. (NASDAQ:PTVE) recently. Along with the solid headline numbers, we think that investors have some reasons for optimism.

Check out our latest analysis for Pactiv Evergreen

How Do Unusual Items Influence Profit?

To properly understand Pactiv Evergreen's profit results, we need to consider the US$114m 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. 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 Pactiv Evergreen 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 Pactiv Evergreen's Profit Performance

Because unusual items detracted from Pactiv Evergreen'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 Pactiv Evergreen's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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. If you'd like to know more about Pactiv Evergreen as a business, it's important to be aware of any risks it's facing. For example, we've found that Pactiv Evergreen has 3 warning signs (1 is a bit concerning!) that deserve your attention before going any further with your analysis.

Today we've zoomed in on a single data point to better understand the nature of Pactiv Evergreen'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.