We Like Héroux-Devtek's (TSE:HRX) Earnings For More Than Just Statutory Profit

By
Simply Wall St
Published
May 27, 2021
TSX:HRX
Source: Shutterstock

Héroux-Devtek Inc.'s (TSE:HRX) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

Check out our latest analysis for Héroux-Devtek

earnings-and-revenue-history
TSX:HRX Earnings and Revenue History May 27th 2021

The Impact Of Unusual Items On Profit

For anyone who wants to understand Héroux-Devtek's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CA$9.5m 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 that's hardly a surprise given these line items are considered unusual. If Héroux-Devtek 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 Héroux-Devtek's Profit Performance

Because unusual items detracted from Héroux-Devtek's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Héroux-Devtek's earnings potential is at least as good as it seems, and maybe even better! 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Héroux-Devtek has 2 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Héroux-Devtek'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. 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.
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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.