Winnebago Industries' (NYSE:WGO) Soft Earnings Don't Show The Whole Picture

The market was pleased with the recent earnings report from Winnebago Industries, Inc. (NYSE:WGO), despite the profit numbers being soft. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

Check out our latest analysis for Winnebago Industries

How Do Unusual Items Influence Profit?

To properly understand Winnebago Industries' profit results, we need to consider the US$36m expense attributed 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Winnebago Industries 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 Winnebago Industries' Profit Performance

Unusual items (expenses) detracted from Winnebago Industries' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Winnebago Industries' statutory profit actually understates its earnings potential! 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. If you want to do dive deeper into Winnebago Industries, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Winnebago Industries you should know about.

This note has only looked at a single factor that sheds light on the nature of Winnebago Industries' 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. 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.