There May Be Reason For Hope In ASM International's (AMS:ASM) Disappointing Earnings

The most recent earnings report from ASM International NV (AMS:ASM) was disappointing for shareholders. However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

Our analysis indicates that ASM is potentially undervalued!

How Do Unusual Items Influence Profit?

For anyone who wants to understand ASM International's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €318m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. In the twelve months to September 2022, ASM International had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 ASM International's Profit Performance

As we mentioned previously, the ASM International's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that ASM International's statutory profit actually understates its earnings potential! And the EPS is up 8.6% annually, over the last three years. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 3 warning signs for ASM International and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of ASM International's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. 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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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.