Some May Be Optimistic About MGP Ingredients' (NASDAQ:MGPI) Earnings

The market was pleased with the recent earnings report from MGP Ingredients, Inc. (NASDAQ:MGPI), despite the profit numbers being soft. However, we think the company is showing some signs that things are more promising than they seem.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand MGP Ingredients' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$101m 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. In the twelve months to March 2025, MGP Ingredients had a big unusual items expense. 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 MGP Ingredients' Profit Performance

As we discussed above, we think the significant unusual expense will make MGP Ingredients' statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that MGP Ingredients' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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 MGP Ingredients at this point in time. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of MGP Ingredients.

This note has only looked at a single factor that sheds light on the nature of MGP Ingredients' 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. 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 with significant insider holdings 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.