InfoBeans Technologies' (NSE:INFOBEAN) Strong Earnings Are Of Good Quality

InfoBeans Technologies Limited (NSE:INFOBEAN) recently posted some strong earnings, and the market responded positively. We have done some analysis, and we found several positive factors beyond the profit numbers.

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The Impact Of Unusual Items On Profit

For anyone who wants to understand InfoBeans Technologies' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₹153m due 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 InfoBeans Technologies 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 InfoBeans Technologies.

Our Take On InfoBeans Technologies' Profit Performance

Unusual items (expenses) detracted from InfoBeans Technologies' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that InfoBeans Technologies' statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate 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. If you want to do dive deeper into InfoBeans Technologies, you'd also look into what risks it is currently facing. While conducting our analysis, we found that InfoBeans Technologies has 1 warning sign and it would be unwise to ignore it.

Today we've zoomed in on a single data point to better understand the nature of InfoBeans Technologies' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.