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Shareholders appeared unconcerned with EnBW Energie Baden-Württemberg AG's (ETR:EBK) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
See our latest analysis for EnBW Energie Baden-Württemberg
The Impact Of Unusual Items On Profit
Importantly, our data indicates that EnBW Energie Baden-Württemberg's profit was reduced by €694m, 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect EnBW Energie Baden-Württemberg to produce a higher profit next year, all else being equal.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of EnBW Energie Baden-Württemberg.
Our Take On EnBW Energie Baden-Württemberg's Profit Performance
Unusual items (expenses) detracted from EnBW Energie Baden-Württemberg's earnings over the last year, but we might see an improvement next year. Because of this, we think EnBW Energie Baden-Württemberg's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 43% per year 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 4 warning signs for EnBW Energie Baden-Württemberg (2 are significant) you should be familiar with.
This note has only looked at a single factor that sheds light on the nature of EnBW Energie Baden-Württemberg'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.