Bright Horizons Family Solutions' (NYSE:BFAM) Performance Is Even Better Than Its Earnings Suggest

Bright Horizons Family Solutions Inc. (NYSE:BFAM) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

View our latest analysis for Bright Horizons Family Solutions

How Do Unusual Items Influence Profit?

To properly understand Bright Horizons Family Solutions' profit results, we need to consider the US$27m 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 Bright Horizons Family Solutions 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 Bright Horizons Family Solutions' Profit Performance

Unusual items (expenses) detracted from Bright Horizons Family Solutions' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Bright Horizons Family Solutions' statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. 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 Bright Horizons Family Solutions, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Bright Horizons Family Solutions 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 Bright Horizons Family Solutions' 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. 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.