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The market seemed underwhelmed by last week's earnings announcement from abrdn European Logistics Income plc (LON:ASLI) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.
The Impact Of Unusual Items On Profit
For anyone who wants to understand abrdn European Logistics Income's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €6.3m due 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. If abrdn European Logistics Income doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of abrdn European Logistics Income.
Our Take On abrdn European Logistics Income's Profit Performance
Because unusual items detracted from abrdn European Logistics Income's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think abrdn European Logistics Income's earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. 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 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 abrdn European Logistics Income (2 make us uncomfortable) you should be familiar with.
This note has only looked at a single factor that sheds light on the nature of abrdn European Logistics Income'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. 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.