Shareholders appeared unconcerned with Genuine Parts Company's (NYSE:GPC) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for Genuine Parts

The Impact Of Unusual Items On Profit

To properly understand Genuine Parts' profit results, we need to consider the US$254m expense attributed 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. If Genuine Parts 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 Genuine Parts' Profit Performance

Because unusual items detracted from Genuine Parts' 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 Genuine Parts' statutory profit actually understates its earnings potential! And it's also good to see that its earnings per share have improved a bit over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Genuine Parts, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Genuine Parts you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Genuine Parts' profit. But there are plenty of other ways to inform your opinion of a company. 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.