Happiest Minds Technologies' (NSE:HAPPSTMNDS) Promising Earnings May Rest On Soft Foundations

Despite announcing strong earnings, Happiest Minds Technologies Limited's (NSE:HAPPSTMNDS) stock was sluggish. We think that the market might be paying attention to some underlying factors are concerning.

See our latest analysis for Happiest Minds Technologies

The Impact Of Unusual Items On Profit

For anyone who wants to understand Happiest Minds Technologies' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₹142m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Happiest Minds Technologies' Profit Performance

Arguably, Happiest Minds Technologies' statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Happiest Minds Technologies' true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 67% in 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. If you want to do dive deeper into Happiest Minds Technologies, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Happiest Minds Technologies and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Happiest Minds Technologies' 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 that insiders are buying to be useful.

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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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