SPML Infra's (NSE:SPMLINFRA) Robust Earnings Are Supported By Other Strong Factors

Simply Wall St
November 18, 2021
Source: Shutterstock

When companies post strong earnings, the stock generally performs well, just like SPML Infra Limited's (NSE:SPMLINFRA) stock has recently. We have done some analysis, and we found several positive factors beyond the profit numbers.

View our latest analysis for SPML Infra

NSEI:SPMLINFRA Earnings and Revenue History November 19th 2021

The Impact Of Unusual Items On Profit

To properly understand SPML Infra's profit results, we need to consider the ₹138m expense attributed to unusual items. 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 SPML Infra 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 SPML Infra.

Our Take On SPML Infra's Profit Performance

Unusual items (expenses) detracted from SPML Infra's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that SPML Infra's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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. 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. To that end, you should learn about the 4 warning signs we've spotted with SPML Infra (including 2 which can't be ignored).

Today we've zoomed in on a single data point to better understand the nature of SPML Infra'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. 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.