Globus Medical's (NYSE:GMED) Performance Is Even Better Than Its Earnings Suggest

By
Simply Wall St
Published
February 24, 2022
NYSE:GMED
Source: Shutterstock

The subdued stock price reaction suggests that Globus Medical, Inc.'s (NYSE:GMED) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures.

See our latest analysis for Globus Medical

earnings-and-revenue-history
NYSE:GMED Earnings and Revenue History February 24th 2022

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Globus Medical's profit was reduced by US$20m, 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Globus Medical 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 Globus Medical's Profit Performance

Because unusual items detracted from Globus Medical'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 Globus Medical's statutory profit actually understates its earnings potential! And the EPS is up 43% over 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. Obviously, we love to consider the historical data to inform our opinion of a company. But it can be really valuable to consider what other analysts are forecasting. At Simply Wall St, we have analyst estimates which you can view by clicking here.

Today we've zoomed in on a single data point to better understand the nature of Globus Medical's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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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