Investors Can Find Comfort In Easy Trip Planners' (NSE:EASEMYTRIP) Earnings Quality

Shareholders appeared unconcerned with Easy Trip Planners Limited's (NSE:EASEMYTRIP) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for Easy Trip Planners

The Impact Of Unusual Items On Profit

For anyone who wants to understand Easy Trip Planners' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₹724m 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Easy Trip Planners to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Easy Trip Planners' Profit Performance

Because unusual items detracted from Easy Trip Planners' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Easy Trip Planners' statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 65% per year over the last three years. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 3 warning signs for Easy Trip Planners and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Easy Trip Planners' 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 with significant insider holdings 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.