Why Société BIC's (EPA:BB) Earnings Are Better Than They Seem

Société BIC SA's (EPA:BB) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

Check out our latest analysis for Société BIC

How Do Unusual Items Influence Profit?

To properly understand Société BIC's profit results, we need to consider the €32m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Société BIC to produce a higher profit next year, all else being equal.

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 Société BIC's Profit Performance

Because unusual items detracted from Société BIC's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Société BIC's statutory profit actually understates its earnings potential! And the EPS is up 24% over the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about Société BIC as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Société BIC has 1 warning sign and it would be unwise to ignore it.

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

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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.