We Think That There Are Some Issues For Intracom Holdings (ATH:INTRK) Beyond Its Promising Earnings

The recent earnings posted by Intracom Holdings S.A. (ATH:INTRK) were solid, but the stock didn't move as much as we expected. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for Intracom Holdings

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Intracom Holdings' profit received a boost of €8.1m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. We can see that Intracom Holdings' positive unusual items were quite significant relative to its profit in the year to June 2023. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Intracom Holdings.

Our Take On Intracom Holdings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Intracom Holdings' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Intracom Holdings' underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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 Intracom Holdings as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Intracom Holdings you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Intracom Holdings' profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.

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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.