We Think Jadranski naftovod d.d's (ZGSE:JNAF) Solid Earnings Are Understated

Jadranski naftovod d.d.'s (ZGSE:JNAF) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

View our latest analysis for Jadranski naftovod d.d

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jadranski naftovod d.d's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €13m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. 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 36% annually, over the last three years. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 2 warning signs for Jadranski naftovod d.d (1 is concerning!) that we believe deserve your full attention.

Today we've zoomed in on a single data point to better understand the nature of Jadranski naftovod d.d's profit. 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 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.