Yahoo Finance Medtronic's (NYSE:MDT) Solid Earnings Have Been Accounted For Conservatively
Investors signalled that they were pleased with Medtronic plc's (NYSE:MDT) most recent earnings report. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.
Check out our latest analysis for Medtronic
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Medtronic's profit was reduced by US$1.3b, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Medtronic 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 Medtronic's Profit Performance
Because unusual items detracted from Medtronic's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Medtronic's statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 9.3% in the 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Medtronic you should know about.
Today we've zoomed in on a single data point to better understand the nature of Medtronic's profit. But there are plenty of other ways to inform your opinion of a company. 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.
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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.
