Stock Analysis

Abu Dhabi National Energy Company PJSC (ADX:TAQA) Strong Profits May Be Masking Some Underlying Issues

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Abu Dhabi National Energy Company PJSC's (ADX:TAQA) healthy profit numbers didn't contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

See our latest analysis for Abu Dhabi National Energy Company PJSC

ADX:TAQA Earnings and Revenue History February 23rd 2021

How Do Unusual Items Influence Profit?

For anyone who wants to understand Abu Dhabi National Energy Company PJSC's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from د.إ570m 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 analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Abu Dhabi National Energy Company PJSC doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 National Energy Company PJSC's Profit Performance

Arguably, Abu Dhabi National Energy 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 National Energy Company PJSC's statutory profits are better than its underlying earnings power. The good news is that its earnings per share increased slightly 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 3 warning signs (1 can't be ignored!) that you ought to be aware of before buying any shares in Abu Dhabi National Energy Company PJSC.

This note has only looked at a single factor that sheds light on the nature of Abu Dhabi National Energy 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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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