Shareholders Can Be Confident That Emerald Holding's (NYSE:EEX) Earnings Are High Quality

Emerald Holding, Inc. (NYSE:EEX) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

We've discovered 2 warning signs about Emerald Holding. View them for free.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Emerald Holding's profit was reduced by US$23m, 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. 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. If Emerald Holding 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 Emerald Holding's Profit Performance

Unusual items (expenses) detracted from Emerald Holding's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Emerald Holding's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Emerald Holding as a business, it's important to be aware of any risks it's facing. For example, we've found that Emerald Holding has 2 warning signs (1 is a bit concerning!) that deserve your attention before going any further with your analysis.

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