Robust Earnings May Not Tell The Whole Story For AtriCure (NASDAQ:ATRC)

Despite posting some strong earnings, the market for AtriCure, Inc.'s (NASDAQ:ATRC) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

View our latest analysis for AtriCure

The Impact Of Unusual Items On Profit

For anyone who wants to understand AtriCure's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$92m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that AtriCure's positive unusual items were quite significant relative to its profit in the year to September 2021. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger 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 AtriCure's Profit Performance

As previously mentioned, AtriCure's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that AtriCure's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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 AtriCure, you'd also look into what risks it is currently facing. Case in point: We've spotted 4 warning signs for AtriCure you should be mindful of and 1 of them is potentially serious.

This note has only looked at a single factor that sheds light on the nature of AtriCure's 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 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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