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The subdued stock price reaction suggests that Eckert & Ziegler SE's (ETR:EUZ) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures.
The Impact Of Unusual Items On Profit
To properly understand Eckert & Ziegler's profit results, we need to consider the €7.6m 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. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Eckert & Ziegler to produce a higher profit next year, all else being equal.
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 Eckert & Ziegler's Profit Performance
Because unusual items detracted from Eckert & Ziegler'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 Eckert & Ziegler's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 15% annually, over the last three years. 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. While it's really important to consider how well a company's statutory earnings represent its true earnings power, it's also worth taking a look at what analysts are forecasting for the future. Luckily, you can check out what analysts are forecasting by clicking here .
Today we've zoomed in on a single data point to better understand the nature of Eckert & Ziegler'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.