There May Be Reason For Hope In Jadranski naftovod d.d's (ZGSE:JNAF) Disappointing Earnings

The market was pleased with the recent earnings report from Jadranski naftovod d.d. (ZGSE:JNAF), despite the profit numbers being soft. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for Jadranski naftovod d.d

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Jadranski naftovod d.d's profit was reduced by €13m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Jadranski naftovod d.d to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jadranski naftovod d.d.

Our Take On Jadranski naftovod d.d's Profit Performance

Unusual items (expenses) detracted from Jadranski naftovod d.d's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Jadranski naftovod d.d's statutory profit actually understates its earnings potential! And the EPS is up 24% annually, over the last three years. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. When we did our research, we found 3 warning signs for Jadranski naftovod d.d (1 shouldn't be ignored!) that we believe deserve your full attention.

This note has only looked at a single factor that sheds light on the nature of Jadranski naftovod d.d's 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.