We Think You Can Look Beyond Gogo's (NASDAQ:GOGO) Lackluster Earnings

The most recent earnings report from Gogo Inc. (NASDAQ:GOGO) was disappointing for shareholders. However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

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In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, Gogo issued 5.3% more new shares over the last year. That means its earnings are split among a greater number of shares. To talk about net income, without noticing earnings per share, is to be distracted by the big numbers while ignoring the smaller numbers that talk to per share value. You can see a chart of Gogo's EPS by clicking here.

How Is Dilution Impacting Gogo's Earnings Per Share (EPS)?

Gogo's net profit dropped by 97% per year over the last three years. And even focusing only on the last twelve months, we see profit is down 89%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 89% in the same period. So you can see that the dilution has had a bit of an impact on shareholders.

If Gogo's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.

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.

The Impact Of Unusual Items On Profit

Alongside that dilution, it's also important to note that Gogo's profit suffered from unusual items, which reduced profit by US$65m in the last twelve months. 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, after all, that's exactly what the accounting terminology implies. Gogo took a rather significant hit from unusual items in the year to June 2025. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Our Take On Gogo's Profit Performance

To sum it all up, Gogo took a hit from unusual items which pushed its profit down; without that, it would have made more money. But unfortunately the dilution means that shareholders now own a smaller proportion of the company (assuming they maintained the same number of shares). That will weigh on earnings per share, even if it is not reflected in net income. Considering all the aforementioned, we'd venture that Gogo's profit result is a pretty good guide to its true profitability, albeit a bit on the conservative side. So while earnings quality is important, it's equally important to consider the risks facing Gogo at this point in time. To that end, you should learn about the 3 warning signs we've spotted with Gogo (including 1 which is a bit concerning).

Our examination of Gogo has focussed on certain factors that can make its earnings look better than they are. 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. 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.

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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.