Some Investors May Be Willing To Look Past Síminn hf's (ICE:SIMINN) Soft Earnings

Shareholders appeared unconcerned with Síminn hf.'s (ICE:SIMINN) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Our free stock report includes 3 warning signs investors should be aware of before investing in Síminn hf. Read for free now.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Síminn hf's profit was reduced by Kr614m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Síminn 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 Síminn hf.

Our Take On Síminn hf's Profit Performance

Because unusual items detracted from Síminn hf's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Síminn hf's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 49% per year over the last three years. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Our analysis shows 3 warning signs for Síminn hf (1 is a bit unpleasant!) 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 Síminn 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. 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.