Investors Can Find Comfort In Buzzi Unicem's (BIT:BZU) Earnings Quality

The market for Buzzi Unicem S.p.A.'s (BIT:BZU) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for Buzzi Unicem

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Buzzi Unicem's profit was reduced by €100m, 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. If Buzzi Unicem 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 Buzzi Unicem's Profit Performance

Because unusual items detracted from Buzzi Unicem'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 Buzzi Unicem's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 15% annually, 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. If you want to do dive deeper into Buzzi Unicem, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Buzzi Unicem, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Buzzi Unicem's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.