We Think You Can Look Beyond Laboratory Corporation of America Holdings' (NYSE:LH) Lackluster Earnings

The most recent earnings report from Laboratory Corporation of America Holdings (NYSE:LH) was disappointing for shareholders. While the headline numbers were soft, we believe that investors might be missing some encouraging factors.

See our latest analysis for Laboratory Corporation of America Holdings

How Do Unusual Items Influence Profit?

For anyone who wants to understand Laboratory Corporation of America Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$444m 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. Assuming those unusual expenses don't come up again, we'd therefore expect Laboratory Corporation of America Holdings 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 Laboratory Corporation of America Holdings' Profit Performance

Unusual items (expenses) detracted from Laboratory Corporation of America Holdings' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Laboratory Corporation of America Holdings' statutory profit actually understates its earnings potential! 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 Laboratory Corporation of America Holdings as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 3 warning signs for Laboratory Corporation of America Holdings and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Laboratory Corporation of America Holdings' 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. 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.

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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.