Stock Analysis

Becton Dickinson's (NYSE:BDX) Conservative Accounting Might Explain Soft Earnings

NYSE:BDX
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Shareholders appeared unconcerned with Becton, Dickinson and Company's (NYSE:BDX) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

See our latest analysis for Becton Dickinson

earnings-and-revenue-history
NYSE:BDX Earnings and Revenue History February 8th 2024

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Becton Dickinson's profit was reduced by US$709m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. If Becton Dickinson doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Becton Dickinson's Profit Performance

Because unusual items detracted from Becton Dickinson's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Becton Dickinson's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for Becton Dickinson and we think they deserve your attention.

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

Valuation is complex, but we're helping make it simple.

Find out whether Becton Dickinson is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.