Should You Use Kofola CeskoSlovensko's (SEP:KOFOL) Statutory Earnings To Analyse It?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. Today we'll focus on whether this year's statutory profits are a good guide to understanding Kofola CeskoSlovensko (SEP:KOFOL).

While Kofola CeskoSlovensko was able to generate revenue of Kč6.35b in the last twelve months, we think its profit result of Kč253.3m was more important. The chart below shows how profit has actually increased over the last three years, even while revenue has declined.

Check out our latest analysis for Kofola CeskoSlovensko

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Kofola CeskoSlovensko's statutory earnings. 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.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Kofola CeskoSlovensko's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by Kč89m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Kofola CeskoSlovensko to produce a higher profit next year, all else being equal.

Our Take On Kofola CeskoSlovensko's Profit Performance

Because unusual items detracted from Kofola CeskoSlovensko's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Kofola CeskoSlovensko's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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 Kofola CeskoSlovensko as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Kofola CeskoSlovensko, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Kofola CeskoSlovensko'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 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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