Investors Can Find Comfort In Juniper Networks' (NYSE:JNPR) Earnings Quality

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

Check out our latest analysis for Juniper Networks

The Impact Of Unusual Items On Profit

To properly understand Juniper Networks' profit results, we need to consider the US$132m 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. Assuming those unusual expenses don't come up again, we'd therefore expect Juniper Networks 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 Juniper Networks' Profit Performance

Unusual items (expenses) detracted from Juniper Networks' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Juniper Networks' statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 15% per year over the last three years. 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 Juniper Networks as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 4 warning signs for Juniper Networks and you'll want to know about them.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com