Earnings Troubles May Signal Larger Issues for Himsnab Bulgaria AD (BUL:CHSB) Shareholders

Himsnab Bulgaria AD's (BUL:CHSB) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Himsnab Bulgaria AD's profit received a boost of лв503k in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Himsnab Bulgaria AD.

Our Take On Himsnab Bulgaria AD's Profit Performance

Arguably, Himsnab Bulgaria AD's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Himsnab Bulgaria AD's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. 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'd like to know more about Himsnab Bulgaria AD as a business, it's important to be aware of any risks it's facing. When we did our research, we found 2 warning signs for Himsnab Bulgaria AD (1 is significant!) that we believe deserve your full attention.

This note has only looked at a single factor that sheds light on the nature of Himsnab Bulgaria AD's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.