Eidesvik Offshore's (OB:EIOF) Anemic Earnings Might Be Worse Than You Think

The market wasn't impressed with the soft earnings from Eidesvik Offshore ASA (OB:EIOF) recently. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Eidesvik Offshore

How Do Unusual Items Influence Profit?

To properly understand Eidesvik Offshore's profit results, we need to consider the kr119m gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Eidesvik Offshore had a rather significant contribution from unusual items relative to its profit to June 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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

Our Take On Eidesvik Offshore's Profit Performance

As we discussed above, we think the significant positive unusual item makes Eidesvik Offshore's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Eidesvik Offshore's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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 Eidesvik Offshore, you'd also look into what risks it is currently facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Eidesvik Offshore.

This note has only looked at a single factor that sheds light on the nature of Eidesvik Offshore'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 with significant insider holdings 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.