Why Oil and Gas Exploration and Production AD's (BUL:NGAZ) Shaky Earnings Are Just The Beginning Of Its Problems

Oil and Gas Exploration and Production AD's (BUL:NGAZ) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for Oil and Gas Exploration and Production AD

The Impact Of Unusual Items On Profit

For anyone who wants to understand Oil and Gas Exploration and Production AD's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from лв950k worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. We can see that Oil and Gas Exploration and Production AD's positive unusual items were quite significant relative to its profit in the year to June 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Oil and Gas Exploration and Production AD.

Our Take On Oil and Gas Exploration and Production AD's Profit Performance

As previously mentioned, Oil and Gas Exploration and Production AD's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Oil and Gas Exploration and Production AD's underlying earnings power is lower than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Oil and Gas Exploration and Production AD as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Oil and Gas Exploration and Production AD you should be mindful of and 1 of these is potentially serious.

Today we've zoomed in on a single data point to better understand the nature of Oil and Gas Exploration and Production AD'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.