GOCL's (NSE:GOCLCORP) Solid Earnings Have Been Accounted For Conservatively

Despite posting healthy earnings, GOCL Corporation Limited's (NSE:GOCLCORP ) stock has been quite weak. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.

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The Impact Of Unusual Items On Profit

To properly understand GOCL's profit results, we need to consider the ₹103m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect GOCL 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 GOCL.

Our Take On GOCL's Profit Performance

Unusual items (expenses) detracted from GOCL's earnings over the last year, but we might see an improvement next year. Because of this, we think GOCL's earnings potential is at least as good as it seems, and maybe even better! Furthermore, it has done a great job growing EPS over 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. 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. For instance, we've identified 2 warning signs for GOCL (1 is significant) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of GOCL'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 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.