Resideo Technologies, Inc.'s (NYSE:REZI) stock was strong despite it releasing a soft earnings report last week. However, we think the company is showing some signs that things are more promising than they seem.

Our free stock report includes 3 warning signs investors should be aware of before investing in Resideo Technologies. Read for free now.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Resideo Technologies' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$341m due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Resideo Technologies took a rather significant hit from unusual items in the year to March 2025. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

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 Resideo Technologies' Profit Performance

As we discussed above, we think the significant unusual expense will make Resideo Technologies' statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Resideo Technologies' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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 Resideo Technologies at this point in time. For instance, we've identified 3 warning signs for Resideo Technologies (1 is concerning) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of Resideo Technologies' 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.