As Commercial Industrial Company of Computers and Toys (ATH:ASCO) Strong Profits May Be Masking Some Underlying Issues

As Commercial Industrial Company of Computers and Toys S.A.'s (ATH:ASCO) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

Check out our latest analysis for As Commercial Industrial Company of Computers and Toys

How Do Unusual Items Influence Profit?

Importantly, our data indicates that As Commercial Industrial Company of Computers and Toys' profit received a boost of €758k in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of As Commercial Industrial Company of Computers and Toys.

Our Take On As Commercial Industrial Company of Computers and Toys' Profit Performance

Arguably, As Commercial Industrial Company of Computers and Toys' statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that As Commercial Industrial Company of Computers and Toys' statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. In terms of investment risks, we've identified 2 warning signs with As Commercial Industrial Company of Computers and Toys, and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of As Commercial Industrial Company of Computers and Toys' 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 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.