In This Article:
Investors were disappointed by Ensign Energy Services Inc.'s (TSE:ESI ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.
View our latest analysis for Ensign Energy Services
How Do Unusual Items Influence Profit?
For anyone who wants to understand Ensign Energy Services' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CA$11m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
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 Ensign Energy Services' Profit Performance
We'd posit that Ensign Energy Services' statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Ensign Energy Services' statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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 Ensign Energy Services, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Ensign Energy Services (1 makes us a bit uncomfortable) you should be familiar with.
Today we've zoomed in on a single data point to better understand the nature of Ensign Energy Services' 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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.