Cantaloupe's (NASDAQ:CTLP) Promising Earnings May Rest On Soft Foundations

Despite posting some strong earnings, the market for Cantaloupe, Inc.'s (NASDAQ:CTLP) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.

See our latest analysis for Cantaloupe

The Impact Of Unusual Items On Profit

For anyone who wants to understand Cantaloupe's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$1.5m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Cantaloupe's positive unusual items were quite significant relative to its profit in the year to March 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to 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 Cantaloupe's Profit Performance

As we discussed above, we think the significant positive unusual item makes Cantaloupe's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Cantaloupe's underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money last year. 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. If you'd like to know more about Cantaloupe as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Cantaloupe and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Cantaloupe'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 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.