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CHAPTER 6 Stock Research Checklist—Earni... > Does the Company Have Any One-Time E...

Does the Company Have Any One-Time Event That Recently Increased Earnings?

When you are analyzing a company’s stocks, you need to find out if there were any one-time events that increased the company’s earnings recently. Because if there are one-time events, you need to remove those earnings from your calculation of historic earnings so you can project the earnings conservatively. One-time events could be a sale of assets, a big order from a particular customer—which maybe increased the earnings for one year or multiple years and might not continue in the future, a big tax refund, or a legal settlement.

For example, look at Sharp Compliance Corp (SMED), which is a medical waste disposal company. The business was founded in 1992 and is a small-cap company with a market cap of around $65 million.


  

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