SpartanNash's (NASDAQ:SPTN) Earnings Offer More Than Meets The Eye

Investors signalled that they were pleased with SpartanNash Company's (NASDAQ:SPTN) most recent earnings report. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

View our latest analysis for SpartanNash

How Do Unusual Items Influence Profit?

For anyone who wants to understand SpartanNash's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$31m due 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 SpartanNash 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 SpartanNash's Profit Performance

Because unusual items detracted from SpartanNash's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that SpartanNash's statutory profit actually understates its earnings potential! And the EPS is up 15% over the last twelve months. 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. So while earnings quality is important, it's equally important to consider the risks facing SpartanNash at this point in time. While conducting our analysis, we found that SpartanNash has 2 warning signs and it would be unwise to ignore them.

Today we've zoomed in on a single data point to better understand the nature of SpartanNash'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 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.