Fugro's (AMS:FUR) Solid Profits Have Weak Fundamentals

By
Simply Wall St
Published
March 08, 2022
ENXTAM:FUR
Source: Shutterstock

Fugro N.V. (AMS:FUR) announced strong profits, but the stock was stagnant. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

See our latest analysis for Fugro

earnings-and-revenue-history
ENXTAM:FUR Earnings and Revenue History March 8th 2022

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Fugro's profit received a boost of €8.1m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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'. If Fugro doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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 Fugro's Profit Performance

Arguably, Fugro's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Fugro's true underlying earnings power is actually less than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. Every company has risks, and we've spotted 1 warning sign for Fugro you should know about.

Today we've zoomed in on a single data point to better understand the nature of Fugro'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. 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 that insiders are buying to be useful.

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