Investors were disappointed with the weak earnings posted by Flight Centre Travel Group Limited (ASX:FLT ). While the headline numbers were soft, we believe that investors might be missing some encouraging factors.

Check out our latest analysis for Flight Centre Travel Group

How Do Unusual Items Influence Profit?

For anyone who wants to understand Flight Centre Travel Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by AU$28m 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. 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 Flight Centre Travel Group 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 Flight Centre Travel Group's Profit Performance

Because unusual items detracted from Flight Centre Travel Group's 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 Flight Centre Travel Group's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Flight Centre Travel Group at this point in time. For example - Flight Centre Travel Group has 2 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Flight Centre Travel Group'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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.