Charles River Laboratories International's (NYSE:CRL) Soft Earnings Are Actually Better Than They Appear

The market was pleased with the recent earnings report from Charles River Laboratories International, Inc. (NYSE:CRL), despite the profit numbers being soft. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

Check out our latest analysis for Charles River Laboratories International

The Impact Of Unusual Items On Profit

For anyone who wants to understand Charles River Laboratories International's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$324m 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. Charles River Laboratories International took a rather significant hit from unusual items in the year to December 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

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 Charles River Laboratories International's Profit Performance

As we discussed above, we think the significant unusual expense will make Charles River Laboratories International's statutory profit lower than it would otherwise have been. Because of this, we think Charles River Laboratories International's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in the last twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing Charles River Laboratories International at this point in time. Case in point: We've spotted 3 warning signs for Charles River Laboratories International you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Charles River Laboratories International'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.

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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.