Does Ascopiave's (BIT:ASC) Statutory Profit Adequately Reflect Its Underlying Profit?

Broadly speaking, profitable businesses are less risky than unprofitable ones. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. This article will consider whether Ascopiave's (BIT:ASC) statutory profits are a good guide to its underlying earnings.

It's good to see that over the last twelve months Ascopiave made a profit of €37.0m on revenue of €164.2m. Below, you can see that both its revenue and its profit have fallen over the last three years.

Check out our latest analysis for Ascopiave

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will discuss how unusual items have impacted Ascopiave's most recent profit results. 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.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Ascopiave's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from €2.7m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Ascopiave doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Our Take On Ascopiave's Profit Performance

Arguably, Ascopiave's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Ascopiave's statutory profits are better than its underlying earnings power. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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 want to do dive deeper into Ascopiave, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Ascopiave, and understanding it should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Ascopiave'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. 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.
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