Gray Media's (NYSE:GTN) Earnings May Just Be The Starting Point

When companies post strong earnings, the stock generally performs well, just like Gray Media, Inc.'s (NYSE:GTN) stock has recently. We did some digging and found some further encouraging factors that investors will like.

We've discovered 4 warning signs about Gray Media. View them for free.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Gray Media's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$117m 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 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 Gray Media 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 Gray Media's Profit Performance

Unusual items (expenses) detracted from Gray Media's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Gray Media'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. 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. 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. Every company has risks, and we've spotted 4 warning signs for Gray Media (of which 2 are concerning!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Gray Media's 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.