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Investors were disappointed with the weak earnings posted by Resideo Technologies, Inc. (NYSE:REZI ). However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.
Check out our latest analysis for Resideo Technologies
How Do Unusual Items Influence 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$297m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 December 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.
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. Because of this, we think Resideo Technologies' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 2 warning signs for Resideo Technologies you should know about.
Today we've zoomed in on a single data point to better understand 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. 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.