Statutory Profit Doesn't Reflect How Good Kras d.d's (ZGSE:KRAS) Earnings Are

The subdued stock price reaction suggests that Kras d.d.'s (ZGSE:KRAS) strong earnings didn't offer any surprises. Investors are probably missing some underlying factors which are encouraging for the future of the company.

Check out our latest analysis for Kras d.d

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Kras d.d's profit was reduced by Kn6.3m, due to unusual items, over the last year. 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. If Kras d.d doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On Kras d.d's Profit Performance

Because unusual items detracted from Kras d.d's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Kras d.d's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 20% over the last twelve months. 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 while earnings quality is important, it's equally important to consider the risks facing Kras d.d at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Kras d.d.

This note has only looked at a single factor that sheds light on the nature of Kras d.d's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.