There May Be Some Bright Spots In OPAL Fuels' (NASDAQ:OPAL) Earnings

Soft earnings didn't appear to concern OPAL Fuels Inc.'s (NASDAQ:OPAL) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Check out our latest analysis for OPAL Fuels

How Do Unusual Items Influence Profit?

Importantly, our data indicates that OPAL Fuels' profit was reduced by US$2.2m, due to unusual items, over the last year. 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. OPAL Fuels took a rather significant hit from unusual items in the year to December 2023. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 OPAL Fuels' Profit Performance

As we discussed above, we think the significant unusual expense will make OPAL Fuels' statutory profit lower than it would otherwise have been. Because of this, we think OPAL Fuels' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in the last twelve months. 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 OPAL Fuels at this point in time. Case in point: We've spotted 1 warning sign for OPAL Fuels you should be aware of.

This note has only looked at a single factor that sheds light on the nature of OPAL Fuels' 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.