Investors were disappointed with the weak earnings posted by CECO Environmental Corp. (NASDAQ:CECO ). Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

Check out our latest analysis for CECO Environmental

How Do Unusual Items Influence Profit?

For anyone who wants to understand CECO Environmental's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$5.8m 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. Assuming those unusual expenses don't come up again, we'd therefore expect CECO Environmental 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.

Our Take On CECO Environmental's Profit Performance

Because unusual items detracted from CECO Environmental's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think CECO Environmental'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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of CECO Environmental.

This note has only looked at a single factor that sheds light on the nature of CECO Environmental's 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. 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.