Are Alpha Astika Akinita's (ATH:ASTAK) Statutory Earnings A Good Guide To Its Underlying Profitability?

Many investors consider it preferable to invest in profitable companies over unprofitable ones, because profitability suggests a business is sustainable. That said, the current statutory profit is not always a good guide to a company's underlying profitability. In this article, we'll look at how useful this year's statutory profit is, when analysing Alpha Astika Akinita (ATH:ASTAK).

We like the fact that Alpha Astika Akinita made a profit of €3.32m on its revenue of €15.8m, in the last year.

View our latest analysis for Alpha Astika Akinita

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Alpha Astika Akinita's statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Alpha Astika Akinita.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Alpha Astika Akinita's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €782k due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If Alpha Astika Akinita doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Alpha Astika Akinita's Profit Performance

Unusual items (expenses) detracted from Alpha Astika Akinita's earnings over the last year, but we might see an improvement next year. Because of this, we think Alpha Astika Akinita's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share increased by 29% in the last year. 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. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. If you're interested we have a graphic representation of Alpha Astika Akinita's balance sheet.

Today we've zoomed in on a single data point to better understand the nature of Alpha Astika Akinita'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.

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This article by Simply Wall St is general in nature. 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.
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