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The stock was sluggish on the back of Bloomin' Brands, Inc.'s (NASDAQ:BLMN) recent earnings report. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.
The Impact Of Unusual Items On Profit
For anyone who wants to understand Bloomin' Brands' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$57m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. 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 Bloomin' Brands 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.
An Unusual Tax Situation
Just as we noted the unusual items, we must inform you that Bloomin' Brands received a tax benefit which contributed US$18m to the bottom line. This is meaningful because companies usually pay tax rather than receive tax benefits. We're sure the company was pleased with its tax benefit. However, the devil in the detail is that these kind of benefits only impact in the year they are booked, and are often one-off in nature. In the likely event the tax benefit is not repeated, we'd expect to see its statutory profit levels drop, at least in the absence of strong growth. While we think it's good that the company has booked a tax benefit, it does mean that there's every chance the statutory profit will come in a lot higher than it would be if the income was adjusted for one-off factors.
Our Take On Bloomin' Brands' Profit Performance
In the last year Bloomin' Brands received a tax benefit, which boosted its profit in a way that might not be much more sustainable than turning prime farmland into gas fields. But on the other hand, it also saw an unusual item depress its profit. Considering the aforementioned, we think that Bloomin' Brands' profits are probably a reasonable reflection of its underlying profitability; although we'd be confident in that conclusion if we saw a cleaner set of results. If you'd like to know more about Bloomin' Brands as a business, it's important to be aware of any risks it's facing. Be aware that Bloomin' Brands is showing 4 warning signs in our investment analysis and 1 of those is a bit concerning...