Steven Madden's (NASDAQ:SHOO) Robust Earnings Are Supported By Other Strong Factors

By
Simply Wall St
Published
August 04, 2021
NasdaqGS:SHOO
Source: Shutterstock

Steven Madden, Ltd. (NASDAQ:SHOO) just reported healthy earnings but the stock price didn't move much. We think that investors have missed some encouraging factors underlying the profit figures.

View our latest analysis for Steven Madden

earnings-and-revenue-history
NasdaqGS:SHOO Earnings and Revenue History August 4th 2021

How Do Unusual Items Influence Profit?

For anyone who wants to understand Steven Madden's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$48m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Steven Madden 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 Steven Madden's Profit Performance

Unusual items (expenses) detracted from Steven Madden's earnings over the last year, but we might see an improvement next year. Because of this, we think Steven Madden's earnings potential is at least as good as it seems, and maybe even better! Furthermore, it has done a great job growing EPS over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing Steven Madden at this point in time. At Simply Wall St, we found 3 warning signs for Steven Madden and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Steven Madden's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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.
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