SAF-Holland (ETR:SFQ) Is Posting Promising Earnings But The Good News Doesn’t Stop There

The stock was sluggish on the back of SAF-Holland SE's (ETR:SFQ) recent earnings report. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.

View our latest analysis for SAF-Holland

The Impact Of Unusual Items On Profit

Importantly, our data indicates that SAF-Holland's profit was reduced by €19m, 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. 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 SAF-Holland to produce a higher profit next year, all else being equal.

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 SAF-Holland's Profit Performance

Unusual items (expenses) detracted from SAF-Holland's earnings over the last year, but we might see an improvement next year. Because of this, we think SAF-Holland's earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. 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. So while earnings quality is important, it's equally important to consider the risks facing SAF-Holland at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of SAF-Holland.

Today we've zoomed in on a single data point to better understand the nature of SAF-Holland'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.