Investors were disappointed with the solid results of SPX Technologies, Inc. (NYSE:SPXC) recently. According to our analysis, investors should be optimistic as the strong earnings are built on a solid foundation.
Check out our latest analysis for SPX Technologies
The impact of unusual items on profit
To properly understand SPX Technologies’ earnings numbers, we need to consider the $44 million in expenses that were due to unusual items. While deductions due to unusual items are disappointing to begin with, there is also a silver lining. When we analyzed the vast majority of publicly traded companies worldwide, we found that significant unusual items often do not recur. And that is hardly surprising, given that these items are considered unusual. If these unusual expenses do not recur at SPX Technologies, all other things being equal, we would expect earnings to grow in the coming year.
You may be wondering what analysts are predicting in terms of future profitability. Fortunately, you can click here to see an interactive chart depicting future profitability based on their estimates.
Our assessment of SPX Technologies’ earnings development
Unusual items (expenses) have hurt SPX Technologies’ earnings over the last year, but next year we could see an improvement. Based on this observation, we think it’s likely that SPX Technologies’ statutory profit actually understates its earnings potential! Better yet, its earnings per share are growing strongly, which is nice to see. The goal of this article was to assess how well we can trust the statutory profit to reflect the company’s potential, but there’s a lot more to consider. So while the quality of earnings is important, it’s equally important to consider the risks SPX Technologies is currently facing. At Simply Wall St, we found 1 warning signal for SPX Technologies and we think they deserve your attention.
This note only examined a single factor that sheds light on the nature of SPX Technologies’ earnings. But there is always more to discover if you are able to focus on the small details. Some people consider a high return on equity to be a good sign of a quality company, so you may want to see the following free Collection of companies with high return on equity or this list of stocks with high insider ownership.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
