There May Be Reason For Hope In HireQuest's (NASDAQ:HQI) Disappointing Earnings

Shareholders appeared unconcerned with HireQuest, Inc.'s (NASDAQ:HQI) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for HireQuest

How Do Unusual Items Influence Profit?

Importantly, our data indicates that HireQuest's profit was reduced by US$2.9m, 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect HireQuest 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 HireQuest's Profit Performance

Unusual items (expenses) detracted from HireQuest's earnings over the last year, but we might see an improvement next year. Because of this, we think HireQuest's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 18% annually, over the last three years. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - HireQuest has 3 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 HireQuest's 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 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.