Regeneron Pharmaceuticals' (NASDAQ:REGN) Conservative Accounting Might Explain Soft Earnings

Soft earnings didn't appear to concern Regeneron Pharmaceuticals, Inc.'s (NASDAQ:REGN) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

See our latest analysis for Regeneron Pharmaceuticals

The Impact Of Unusual Items On Profit

To properly understand Regeneron Pharmaceuticals' profit results, we need to consider the US$424m expense attributed 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 Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals' Profit Performance

Unusual items (expenses) detracted from Regeneron Pharmaceuticals' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Regeneron Pharmaceuticals' statutory profit actually understates its earnings potential! And the EPS is up 13% 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'd like to know more about Regeneron Pharmaceuticals as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Regeneron Pharmaceuticals and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Regeneron Pharmaceuticals' 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 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.