Why Jamieson Wellness' (TSE:JWEL) Earnings Are Better Than They Seem

The market seemed underwhelmed by last week's earnings announcement from Jamieson Wellness Inc. (TSE:JWEL) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

See our latest analysis for Jamieson Wellness

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Jamieson Wellness' profit was reduced by CA$11m, due to unusual items, over the last year. 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 Jamieson Wellness 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 Jamieson Wellness' Profit Performance

Because unusual items detracted from Jamieson Wellness' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Jamieson Wellness' earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 68% annually, over the last three years. 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 want to do dive deeper into Jamieson Wellness, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Jamieson Wellness you should be mindful of and 1 of them is a bit concerning.

Today we've zoomed in on a single data point to better understand the nature of Jamieson Wellness' profit. But there are plenty of other ways to inform your opinion of a company. 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 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.