Some Investors May Be Willing To Look Past Corteva's (NYSE:CTVA) Soft Earnings

The market was pleased with the recent earnings report from Corteva, Inc. (NYSE:CTVA), despite the profit numbers being soft. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for Corteva

The Impact Of Unusual Items On Profit

For anyone who wants to understand Corteva's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$336m due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. If Corteva 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 Corteva's Profit Performance

Because unusual items detracted from Corteva'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 Corteva's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 33% annually, over the last three years. 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 want to do dive deeper into Corteva, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Corteva has 1 warning sign and it would be unwise to ignore it.

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