We Think You Can Look Beyond Hologic's (NASDAQ:HOLX) Lackluster Earnings

The market for Hologic, Inc.'s (NASDAQ:HOLX) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for Hologic

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hologic's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$317m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Hologic to produce a higher profit next year, all else being equal.

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 Hologic's Profit Performance

Because unusual items detracted from Hologic's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Hologic's earnings potential is at least as good as it seems, and maybe even better! 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. If you'd like to know more about Hologic as a business, it's important to be aware of any risks it's facing. For example - Hologic has 3 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Hologic'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. 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.