We Think That There Are More Issues For Lassila & Tikanoja Oyj (HEL:LAT1V) Than Just Sluggish Earnings

The subdued market reaction suggests that Lassila & Tikanoja Oyj's (HEL:LAT1V) recent earnings didn't contain any surprises. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

View our latest analysis for Lassila & Tikanoja Oyj

The Impact Of Unusual Items On Profit

To properly understand Lassila & Tikanoja Oyj's profit results, we need to consider the €3.9m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Lassila & Tikanoja Oyj's Profit Performance

Arguably, Lassila & Tikanoja Oyj's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Lassila & Tikanoja Oyj's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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 want to do dive deeper into Lassila & Tikanoja Oyj, you'd also look into what risks it is currently facing. At Simply Wall St, we found 3 warning signs for Lassila & Tikanoja Oyj and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Lassila & Tikanoja Oyj's profit. But there are plenty of other ways to inform your opinion of a company. 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 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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