Some Investors May Be Willing To Look Past Corby Spirit and Wine's (TSE:CSW.A) Soft Earnings

Investors were disappointed with the weak earnings posted by Corby Spirit and Wine Limited (TSE:CSW.A ). However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

Check out our latest analysis for Corby Spirit and Wine

The Impact Of Unusual Items On Profit

For anyone who wants to understand Corby Spirit and Wine's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CA$3.6m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Corby Spirit and Wine 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 Corby Spirit and Wine.

Our Take On Corby Spirit and Wine's Profit Performance

Unusual items (expenses) detracted from Corby Spirit and Wine's earnings over the last year, but we might see an improvement next year. Because of this, we think Corby Spirit and Wine's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. 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 Corby Spirit and Wine at this point in time. Be aware that Corby Spirit and Wine 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 Corby Spirit and Wine'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.