LINK Mobility Group Holding's (OB:LINK) Earnings Are Of Questionable Quality

LINK Mobility Group Holding ASA (OB:LINK) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, we think that shareholders may be missing some concerning details in the numbers.

View our latest analysis for LINK Mobility Group Holding

How Do Unusual Items Influence Profit?

For anyone who wants to understand LINK Mobility Group Holding's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from kr23m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 LINK Mobility Group Holding's Profit Performance

Arguably, LINK Mobility Group Holding's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that LINK Mobility Group Holding'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. 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. While conducting our analysis, we found that LINK Mobility Group Holding has 1 warning sign and it would be unwise to ignore it.

Today we've zoomed in on a single data point to better understand the nature of LINK Mobility Group Holding'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.