Soft earnings didn't appear to concern Edgewell Personal Care Company's (NYSE:EPC) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for Edgewell Personal Care

How Do Unusual Items Influence Profit?

For anyone who wants to understand Edgewell Personal Care's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$61m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. If Edgewell Personal Care 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 Edgewell Personal Care's Profit Performance

Unusual items (expenses) detracted from Edgewell Personal Care's earnings over the last year, but we might see an improvement next year. Because of this, we think Edgewell Personal Care's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in 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. So while earnings quality is important, it's equally important to consider the risks facing Edgewell Personal Care at this point in time. Be aware that Edgewell Personal Care is showing 3 warning signs in our investment analysis and 1 of those is concerning...

Today we've zoomed in on a single data point to better understand the nature of Edgewell Personal Care'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.