Some Investors May Be Willing To Look Past L3Harris Technologies' (NYSE:LHX) Soft Earnings

Soft earnings didn't appear to concern L3Harris Technologies, Inc.'s (NYSE:LHX) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for L3Harris Technologies

How Do Unusual Items Influence Profit?

To properly understand L3Harris Technologies' profit results, we need to consider the US$571m expense attributed to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect L3Harris Technologies 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 L3Harris Technologies' Profit Performance

Because unusual items detracted from L3Harris Technologies' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think L3Harris Technologies' 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. If you'd like to know more about L3Harris Technologies as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for L3Harris Technologies (1 is concerning!) that we believe deserve your full attention.

This note has only looked at a single factor that sheds light on the nature of L3Harris Technologies' 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.