We Like The Quality Of Síminn hf's (ICE:SIMINN) Earnings

Síminn hf.'s (ICE:SIMINN) solid earnings announcement recently didn't do much to the stock price. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

Check out our latest analysis for Síminn hf

How Do Unusual Items Influence Profit?

For anyone who wants to understand Síminn hf's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by Kr361m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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 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 the EPS is up 31% over the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about Síminn hf as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Síminn hf and you'll want to know about it.

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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.