We Think Bliss GVS Pharma's (NSE:BLISSGVS) Solid Earnings Are Understated

The stock was sluggish on the back of Bliss GVS Pharma Limited's (NSE:BLISSGVS) recent earnings report. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.

View our latest analysis for Bliss GVS Pharma

How Do Unusual Items Influence Profit?

To properly understand Bliss GVS Pharma's profit results, we need to consider the ₹292m expense attributed 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Bliss GVS Pharma 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 Bliss GVS Pharma.

Our Take On Bliss GVS Pharma's Profit Performance

Unusual items (expenses) detracted from Bliss GVS Pharma's earnings over the last year, but we might see an improvement next year. Because of this, we think Bliss GVS Pharma's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 8.9% 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. So while earnings quality is important, it's equally important to consider the risks facing Bliss GVS Pharma at this point in time. Our analysis shows 2 warning signs for Bliss GVS Pharma (1 is significant!) and we strongly recommend you look at these before investing.

This note has only looked at a single factor that sheds light on the nature of Bliss GVS Pharma'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 that insiders are buying.

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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.