W&T Offshore's (NYSE:WTI) Problems Go Beyond Weak Profit

The market wasn't impressed with the soft earnings from W&T Offshore, Inc. (NYSE:WTI) recently. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for W&T Offshore

The Impact Of Unusual Items On Profit

For anyone who wants to understand W&T Offshore's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$2.2m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If W&T Offshore doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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 W&T Offshore's Profit Performance

We'd posit that W&T Offshore's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that W&T Offshore's statutory profits are better than its underlying earnings power. Sadly, its EPS was down 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For instance, we've identified 3 warning signs for W&T Offshore (1 doesn't sit too well with us) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of W&T Offshore'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. 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.

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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.