Why Koskisen Oyj's (HEL:KOSKI) Shaky Earnings Are Just The Beginning Of Its Problems

The subdued market reaction suggests that Koskisen Oyj's (HEL:KOSKI) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Koskisen Oyj

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Koskisen Oyj's profit received a boost of €1.4m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Koskisen Oyj doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Koskisen Oyj's Profit Performance

Arguably, Koskisen Oyj's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Koskisen 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 Koskisen Oyj, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Koskisen Oyj, and understanding these should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Koskisen Oyj'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. 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 with significant insider holdings 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.