Axalta Coating Systems' (NYSE:AXTA) Solid Earnings Are Supported By Other Strong Factors

Even though Axalta Coating Systems Ltd. (NYSE:AXTA ) posted strong earnings, investors appeared to be underwhelmed. Our analysis says that investors should be optimistic, as the strong profit is built on solid foundations.

View our latest analysis for Axalta Coating Systems

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Axalta Coating Systems' profit was reduced by US$103m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Axalta Coating Systems 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 Axalta Coating Systems' Profit Performance

Because unusual items detracted from Axalta Coating Systems' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Axalta Coating Systems' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 7.9% per year over the last three years. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Axalta Coating Systems.

This note has only looked at a single factor that sheds light on the nature of Axalta Coating Systems' 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 with high insider ownership.

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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.