Glunz & Jensen Holding (CPH:GJ) Strong Profits May Be Masking Some Underlying Issues

The recent earnings posted by Glunz & Jensen Holding A/S (CPH:GJ) were solid, but the stock didn't move as much as we expected. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

See our latest analysis for Glunz & Jensen Holding

How Do Unusual Items Influence Profit?

To properly understand Glunz & Jensen Holding's profit results, we need to consider the kr.8.0m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Glunz & Jensen Holding's positive unusual items were quite significant relative to its profit in the year to December 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Glunz & Jensen Holding.

Our Take On Glunz & Jensen Holding's Profit Performance

As we discussed above, we think the significant positive unusual item makes Glunz & Jensen Holding's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Glunz & Jensen Holding's underlying earnings power is lower than its statutory profit. The good news is that, its earnings per share increased by 49% in 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. To that end, you should learn about the 4 warning signs we've spotted with Glunz & Jensen Holding (including 1 which is a bit unpleasant).

Today we've zoomed in on a single data point to better understand the nature of Glunz & Jensen Holding'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.