Shareholders Can Be Confident That Mon Courtier Energie Groupe's (EPA:ALMCE) Earnings Are High Quality

The subdued stock price reaction suggests that Mon Courtier Energie Groupe S.A.'s (EPA:ALMCE) strong earnings didn't offer any surprises. Our analysis suggests that investors might be missing some promising details.

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Zooming In On Mon Courtier Energie Groupe's Earnings

One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. This ratio tells us how much of a company's profit is not backed by free cashflow.

That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".

Over the twelve months to June 2025, Mon Courtier Energie Groupe recorded an accrual ratio of -0.11. Therefore, its statutory earnings were quite a lot less than its free cashflow. In fact, it had free cash flow of €1.2m in the last year, which was a lot more than its statutory profit of €919.0k. Given that Mon Courtier Energie Groupe had negative free cash flow in the prior corresponding period, the trailing twelve month resul of €1.2m would seem to be a step in the right direction. However, that's not all there is to consider. We can see that unusual items have impacted its statutory profit, and therefore the accrual ratio.

See our latest analysis for Mon Courtier Energie Groupe

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.

The Impact Of Unusual Items On Profit

Mon Courtier Energie Groupe's profit was reduced by unusual items worth €285k in the last twelve months, and this helped it produce high cash conversion, as reflected by its unusual items. In a scenario where those unusual items included non-cash charges, we'd expect to see a strong accrual ratio, which is exactly what has happened in this case. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Mon Courtier Energie Groupe to produce a higher profit next year, all else being equal.

Our Take On Mon Courtier Energie Groupe's Profit Performance

Considering both Mon Courtier Energie Groupe's accrual ratio and its unusual items, we think its statutory earnings are unlikely to exaggerate the company's underlying earnings power. Based on these factors, we think Mon Courtier Energie Groupe's earnings potential is at least as good as it seems, and maybe even better! So while earnings quality is important, it's equally important to consider the risks facing Mon Courtier Energie Groupe at this point in time. Our analysis shows 2 warning signs for Mon Courtier Energie Groupe (1 can't be ignored!) and we strongly recommend you look at these bad boys before investing.

After our examination into the nature of Mon Courtier Energie Groupe's profit, we've come away optimistic for the company. 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.