Shareholders appeared unconcerned with Worthington Steel, Inc.'s (NYSE:WS) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

How Do Unusual Items Influence Profit?

To properly understand Worthington Steel's profit results, we need to consider the US$129m expense attributed 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 that's hardly a surprise given these line items are considered unusual. In the twelve months to May 2026, Worthington Steel had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Worthington Steel.

Our Take On Worthington Steel's Profit Performance

As we mentioned previously, the Worthington Steel's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Worthington Steel's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. If you want to do dive deeper into Worthington Steel, you'd also look into what risks it is currently facing.

This note has only looked at a single factor that sheds light on the nature of Worthington Steel's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.

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.