Why Abu Dhabi Ports Company PJSC's (ADX:ADPORTS) Shaky Earnings Are Just The Beginning Of Its Problems

The subdued market reaction suggests that Abu Dhabi Ports Company PJSC's (ADX:ADPORTS) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Abu Dhabi Ports Company PJSC

The Impact Of Unusual Items On Profit

For anyone who wants to understand Abu Dhabi Ports Company PJSC's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from د.إ202m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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. And, after all, that's exactly what the accounting terminology implies. 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 Abu Dhabi Ports Company PJSC's Profit Performance

Arguably, Abu Dhabi Ports Company PJSC's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Abu Dhabi Ports Company PJSC's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate 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. If you want to do dive deeper into Abu Dhabi Ports Company PJSC, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with Abu Dhabi Ports Company PJSC (including 1 which makes us a bit uncomfortable).

This note has only looked at a single factor that sheds light on the nature of Abu Dhabi Ports Company PJSC's 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. 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.

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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.