The market was pleased with the recent earnings report from EPAM Systems, Inc. (NYSE:EPAM), despite the profit numbers being soft. However, we think the company is showing some signs that things are more promising than they seem.

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Importantly, our data indicates that EPAM Systems' profit was reduced by US$74m, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. If EPAM Systems 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.

Because unusual items detracted from EPAM Systems' 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 EPAM Systems' 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 EPAM Systems, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for EPAM Systems you should know about.

Today we've zoomed in on a single data point to better understand the nature of EPAM Systems' 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. 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.

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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.