Concerns Surrounding Avantor's (NYSE:AVTR) Performance
Avantor, Inc. (NYSE:AVTR) reported healthy earnings, but concerns linger due to a significant boost from unusual items amounting to US$357m, which may not be sustainable. Analysts suggest that the statutory profit may not accurately reflect underlying earnings power. Despite impressive EPS growth, potential risks and warning signs have been identified, indicating that investors should consider more than just recent profit figures when evaluating the company's future performance.
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Avantor, Inc.'s (NYSE:AVTR ) stock didn't jump after it announced some healthy earnings. We think that investors might be worried about some concerning underlying factors.
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How Do Unusual Items Influence Profit?
Importantly, our data indicates that Avantor's profit received a boost of US$357m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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. Avantor had a rather significant contribution from unusual items relative to its profit to June 2025. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.
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 Avantor's Profit Performance
As previously mentioned, Avantor's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Avantor's underlying earnings power is lower than its statutory profit. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For instance, we've identified 3 warning signs for Avantor (2 are concerning) you should be familiar with.
Today we've zoomed in on a single data point to better understand the nature of Avantor'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.
