Inter-Rock Minerals' (CVE:IRO) Soft Earnings Are Actually Better Than They Appear

Soft earnings didn't appear to concern Inter-Rock Minerals Inc.'s (CVE:IRO) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

Our free stock report includes 3 warning signs investors should be aware of before investing in Inter-Rock Minerals. Read for free now.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Inter-Rock Minerals' profit was reduced by US$435k, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Inter-Rock Minerals to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Inter-Rock Minerals.

Our Take On Inter-Rock Minerals' Profit Performance

Because unusual items detracted from Inter-Rock Minerals' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Inter-Rock Minerals' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 13% per year 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. To that end, you should learn about the 3 warning signs we've spotted with Inter-Rock Minerals (including 2 which are a bit concerning).

This note has only looked at a single factor that sheds light on the nature of Inter-Rock Minerals' 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. 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.