Should You Use Bliss GVS Pharma's (NSE:BLISSGVS) Statutory Earnings To Analyse It?

Many investors consider it preferable to invest in profitable companies over unprofitable ones, because profitability suggests a business is sustainable. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. Today we'll focus on whether this year's statutory profits are a good guide to understanding Bliss GVS Pharma (NSE:BLISSGVS).

While Bliss GVS Pharma was able to generate revenue of ₹5.49b in the last twelve months, we think its profit result of ₹691.9m was more important. Below, you can see that both its revenue and its profit have fallen over the last three years.

View our latest analysis for Bliss GVS Pharma

Of course, it is only sensible to look beyond the statutory profits and question how well those numbers represent the sustainable earnings power of the business. This article will discuss how unusual items have impacted Bliss GVS Pharma's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Bliss GVS Pharma.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Bliss GVS Pharma's profit was reduced by ₹130m, due to unusual items, over the last year. 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 that's hardly a surprise given these line items are considered unusual. If Bliss GVS Pharma doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Bliss GVS Pharma's Profit Performance

Because unusual items detracted from Bliss GVS Pharma's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Bliss GVS Pharma's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. You can see our latest analysis on Bliss GVS Pharma's balance sheet health here.

This note has only looked at a single factor that sheds light on the nature of Bliss GVS Pharma'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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