RailTel Corporation of India (NSE:RAILTEL) Is Posting Promising Earnings But The Good News Doesn’t Stop There

RailTel Corporation of India Limited (NSE:RAILTEL) announced a healthy earnings result recently, and the market rewarded it with a strong uplift in the stock price. According to our analysis of the report, the strong headline profit numbers are supported by strong earnings fundamentals.

View our latest analysis for RailTel Corporation of India

How Do Unusual Items Influence Profit?

For anyone who wants to understand RailTel Corporation of India's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₹402m 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. If RailTel Corporation of India doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 RailTel Corporation of India's Profit Performance

Unusual items (expenses) detracted from RailTel Corporation of India's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that RailTel Corporation of India's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 41% per year over the last three years. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 1 warning sign for RailTel Corporation of India you should know about.

Today we've zoomed in on a single data point to better understand the nature of RailTel Corporation of India's 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. 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.