We Think That There Are Issues Underlying Eidesvik Offshore's (OB:EIOF) Earnings

Investors were disappointed with Eidesvik Offshore ASA's (OB:EIOF) earnings, despite the strong profit numbers. We think that the market might be paying attention to some underlying factors are concerning.

View 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 kr196m 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. 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 March 2022. 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 previously mentioned, Eidesvik Offshore's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably 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. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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'd like to know more about Eidesvik Offshore as a business, it's important to be aware of any risks it's facing. Our analysis shows 4 warning signs for Eidesvik Offshore (1 is significant!) and we strongly recommend you look at them before investing.

Today we've zoomed in on a single data point to better understand the nature of Eidesvik Offshore'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. 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.