We Think Adler Group's (ETR:ADJ) Profit Is Only A Baseline For What They Can Achieve

The subdued stock price reaction suggests that Adler Group S.A.'s (ETR:ADJ) strong earnings didn't offer any surprises. Investors are probably missing some underlying factors which are encouraging for the future of the company.

See our latest analysis for Adler Group

The Impact Of Unusual Items On Profit

For anyone who wants to understand Adler Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €916m 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. In the twelve months to September 2024, Adler Group had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Adler Group.

Our Take On Adler Group's Profit Performance

As we mentioned previously, the Adler Group's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Adler Group's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money 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. If you'd like to know more about Adler Group as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 4 warning signs for Adler Group you should be mindful of and 2 of them shouldn't be ignored.

Today we've zoomed in on a single data point to better understand the nature of Adler Group'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 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.