There May Be Reason For Hope In Phibro Animal Health's (NASDAQ:PAHC) Disappointing Earnings

Phibro Animal Health Corporation's (NASDAQ:PAHC) stock was strong despite it releasing a soft earnings report last week. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

Check out our latest analysis for Phibro Animal Health

How Do Unusual Items Influence Profit?

For anyone who wants to understand Phibro Animal Health's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$9.5m 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 Phibro Animal Health 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 Phibro Animal Health's Profit Performance

Unusual items (expenses) detracted from Phibro Animal Health's earnings over the last year, but we might see an improvement next year. Because of this, we think Phibro Animal Health's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the 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. Case in point: We've spotted 3 warning signs for Phibro Animal Health you should be mindful of and 1 of these bad boys is potentially serious.

Today we've zoomed in on a single data point to better understand the nature of Phibro Animal Health's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 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.