Alamos Gold's (TSE:AGI) Soft Earnings Don't Show The Whole Picture

By
Simply Wall St
Published
August 04, 2021
TSX:AGI
Source: Shutterstock

Soft earnings didn't appear to concern Alamos Gold Inc.'s (TSE:AGI) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for Alamos Gold

earnings-and-revenue-history
TSX:AGI Earnings and Revenue History August 4th 2021

The Impact Of Unusual Items On Profit

For anyone who wants to understand Alamos Gold's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$233m due to unusual items. 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. Alamos Gold took a rather significant hit from unusual items in the year to June 2021. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 Alamos Gold's Profit Performance

As we mentioned previously, the Alamos Gold's profit was hampered by unusual items in the last year. Because of this, we think Alamos Gold's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over 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. For example - Alamos Gold has 2 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Alamos Gold's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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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