Statutory Profit Doesn't Reflect How Good SeaWorld Entertainment's (NYSE:SEAS) Earnings Are

When companies post strong earnings, the stock generally performs well, just like SeaWorld Entertainment, Inc.'s (NYSE:SEAS) stock has recently. Our analysis found some more factors that we think are good for shareholders.

Check out our latest analysis for SeaWorld Entertainment

The Impact Of Unusual Items On Profit

For anyone who wants to understand SeaWorld Entertainment's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$66m due 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If SeaWorld Entertainment doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 SeaWorld Entertainment's Profit Performance

Unusual items (expenses) detracted from SeaWorld Entertainment's earnings over the last year, but we might see an improvement next year. Because of this, we think SeaWorld Entertainment's earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 3 warning signs for SeaWorld Entertainment you should be mindful of and 1 of them is concerning.

This note has only looked at a single factor that sheds light on the nature of SeaWorld Entertainment's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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.

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