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Shareholders appeared unconcerned with Boralex Inc.'s (TSE:BLX) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.
Check out our latest analysis for Boralex
How Do Unusual Items Influence Profit?
Importantly, our data indicates that Boralex's profit was reduced by CA$41m, 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. 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. If Boralex doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
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 Boralex's Profit Performance
Unusual items (expenses) detracted from Boralex's earnings over the last year, but we might see an improvement next year. Because of this, we think Boralex's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing Boralex at this point in time. Our analysis shows 4 warning signs for Boralex (2 make us uncomfortable!) and we strongly recommend you look at these before investing.
This note has only looked at a single factor that sheds light on the nature of Boralex's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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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.