Monarch Casino & Resort, Inc.'s (NASDAQ:MCRI) 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.

Check out our latest analysis for Monarch Casino & Resort

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Monarch Casino & Resort's profit was reduced by US$29m, due to unusual items, over the last year. 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 Monarch Casino & Resort 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 Monarch Casino & Resort's Profit Performance

Unusual items (expenses) detracted from Monarch Casino & Resort's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Monarch Casino & Resort's statutory profit actually understates its earnings potential! And the EPS is up 6.3% annually, 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. So while earnings quality is important, it's equally important to consider the risks facing Monarch Casino & Resort at this point in time. Case in point: We've spotted 2 warning signs for Monarch Casino & Resort you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Monarch Casino & Resort's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.

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.