Impressive Earnings May Not Tell The Whole Story For MaltaPost (MTSE:MTP)

Despite announcing strong earnings, MaltaPost p.l.c.'s (MTSE:MTP) stock was sluggish. We think that the market might be paying attention to some underlying factors are concerning.

View our latest analysis for MaltaPost

How Do Unusual Items Influence Profit?

To properly understand MaltaPost's profit results, we need to consider the €429k gain attributed to 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of MaltaPost.

Our Take On MaltaPost's Profit Performance

Arguably, MaltaPost's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that MaltaPost's statutory profits are better than its underlying earnings power. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the 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. If you'd like to know more about MaltaPost as a business, it's important to be aware of any risks it's facing. For instance, we've identified 6 warning signs for MaltaPost (2 make us uncomfortable) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of MaltaPost's profit. But there are plenty of other ways to inform your opinion of a company. 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.