Olav Thon Eiendomsselskap's (OB:OLT) Earnings Are Of Questionable Quality

Despite posting some strong earnings, the market for Olav Thon Eiendomsselskap ASA's (OB:OLT) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

Check out our latest analysis for Olav Thon Eiendomsselskap

How Do Unusual Items Influence Profit?

For anyone who wants to understand Olav Thon Eiendomsselskap's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from kr306m worth of 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, after all, that's exactly what the accounting terminology implies. If Olav Thon Eiendomsselskap 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 Olav Thon Eiendomsselskap's Profit Performance

We'd posit that Olav Thon Eiendomsselskap's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Olav Thon Eiendomsselskap's true underlying earnings power is actually less than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money 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 want to do dive deeper into Olav Thon Eiendomsselskap, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Olav Thon Eiendomsselskap you should know about.

Today we've zoomed in on a single data point to better understand the nature of Olav Thon Eiendomsselskap'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.