There May Be Reason For Hope In Manali Petrochemicals' (NSE:MANALIPETC) Disappointing Earnings

Manali Petrochemicals Limited's (NSE:MANALIPETC) stock was strong despite it releasing a soft earnings report last week. We think that investors might be looking at some positive factors beyond the earnings numbers.

Check out our latest analysis for Manali Petrochemicals

The Impact Of Unusual Items On Profit

To properly understand Manali Petrochemicals' profit results, we need to consider the ₹55m 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 Manali Petrochemicals 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 Manali Petrochemicals.

Our Take On Manali Petrochemicals' Profit Performance

Unusual items (expenses) detracted from Manali Petrochemicals' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Manali Petrochemicals' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 2 warning signs for Manali Petrochemicals and you'll want to know about these bad boys.

This note has only looked at a single factor that sheds light on the nature of Manali Petrochemicals' profit. But there are plenty of other ways to inform your opinion of a company. 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.