There May Be Some Bright Spots In EnBW Energie Baden-Württemberg's (ETR:EBK) Earnings

The market for EnBW Energie Baden-Württemberg AG's (ETR:EBK) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for EnBW Energie Baden-Württemberg

How Do Unusual Items Influence Profit?

Importantly, our data indicates that EnBW Energie Baden-Württemberg's profit was reduced by €710m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. If EnBW Energie Baden-Württemberg doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of EnBW Energie Baden-Württemberg.

Our Take On EnBW Energie Baden-Württemberg's Profit Performance

Unusual items (expenses) detracted from EnBW Energie Baden-Württemberg's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that EnBW Energie Baden-Württemberg's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 5 warning signs (2 are a bit unpleasant!) that you ought to be aware of before buying any shares in EnBW Energie Baden-Württemberg.

This note has only looked at a single factor that sheds light on the nature of EnBW Energie Baden-Württemberg'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.