Les Docks des Pétroles d'Ambès -SA's (EPA:DPAM) Soft Earnings Are Actually Better Than They Appear

The market for Les Docks des Pétroles d'Ambès -SA's (EPA:DPAM) 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.

View our latest analysis for Les Docks des Pétroles d'Ambès -SA

How Do Unusual Items Influence Profit?

To properly understand Les Docks des Pétroles d'Ambès -SA's profit results, we need to consider the €2.3m expense attributed to unusual items. 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Les Docks des Pétroles d'Ambès -SA to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Les Docks des Pétroles d'Ambès -SA.

Our Take On Les Docks des Pétroles d'Ambès -SA's Profit Performance

Because unusual items detracted from Les Docks des Pétroles d'Ambès -SA'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 Les Docks des Pétroles d'Ambès -SA's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 61% per year over the last three years. 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. So while earnings quality is important, it's equally important to consider the risks facing Les Docks des Pétroles d'Ambès -SA at this point in time. You'd be interested to know, that we found 3 warning signs for Les Docks des Pétroles d'Ambès -SA and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of Les Docks des Pétroles d'Ambès -SA'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.