Advani Hotels & Resorts (India)'s (NSE:ADVANIHOTR) Problems Go Beyond Weak Profit

Advani Hotels & Resorts (India) Limited's (NSE:ADVANIHOTR) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

Check out our latest analysis for Advani Hotels & Resorts (India)

How Do Unusual Items Influence Profit?

For anyone who wants to understand Advani Hotels & Resorts (India)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₹23m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Advani Hotels & Resorts (India).

Our Take On Advani Hotels & Resorts (India)'s Profit Performance

We'd posit that Advani Hotels & Resorts (India)'s statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Advani Hotels & Resorts (India)'s true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. If you'd like to know more about Advani Hotels & Resorts (India) as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Advani Hotels & Resorts (India) has 2 warning signs and it would be unwise to ignore them.

This note has only looked at a single factor that sheds light on the nature of Advani Hotels & Resorts (India)'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. 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.