Azenta's (NASDAQ:AZTA) Earnings Offer More Than Meets The Eye

Investors signalled that they were pleased with Azenta, Inc.'s (NASDAQ:AZTA) most recent earnings report. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

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The Impact Of Unusual Items On Profit

For anyone who wants to understand Azenta's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$5.2m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Azenta 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 Azenta's Profit Performance

Because unusual items detracted from Azenta's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Azenta'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. So while earnings quality is important, it's equally important to consider the risks facing Azenta at this point in time. For example - Azenta has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Azenta'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. 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 with significant insider holdings 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.