We Like Sartorius Stedim Biotech's (EPA:DIM) Earnings For More Than Just Statutory Profit

The market seemed underwhelmed by last week's earnings announcement from Sartorius Stedim Biotech S.A. (EPA:DIM) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

See our latest analysis for Sartorius Stedim Biotech

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Sartorius Stedim Biotech's profit was reduced by €239m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Sartorius Stedim Biotech doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Sartorius Stedim Biotech's Profit Performance

Unusual items (expenses) detracted from Sartorius Stedim Biotech's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Sartorius Stedim Biotech's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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'd like to know more about Sartorius Stedim Biotech as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Sartorius Stedim Biotech has 2 warning signs and it would be unwise to ignore these.

This note has only looked at a single factor that sheds light on the nature of Sartorius Stedim Biotech'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 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.