We Think Iceland Seafood International hf's (ICE:ICESEA) Robust Earnings Are Conservative

Even though Iceland Seafood International hf.'s (ICE:ICESEA) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

See our latest analysis for Iceland Seafood International hf

How Do Unusual Items Influence Profit?

For anyone who wants to understand Iceland Seafood International hf's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €3.3m 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 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 Iceland Seafood International hf 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 Iceland Seafood International hf.

Our Take On Iceland Seafood International hf's Profit Performance

Because unusual items detracted from Iceland Seafood International hf'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 Iceland Seafood International hf's earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. 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. To help with this, we've discovered 4 warning signs (3 are potentially serious!) that you ought to be aware of before buying any shares in Iceland Seafood International hf.

Today we've zoomed in on a single data point to better understand the nature of Iceland Seafood International hf's 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.