Stolt-Nielsen's (OB:SNI) Earnings Seem To Be Promising

Investors signalled that they were pleased with Stolt-Nielsen Limited's (OB:SNI) most recent earnings report. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.

Check out our latest analysis for Stolt-Nielsen

The Impact Of Unusual Items On Profit

For anyone who wants to understand Stolt-Nielsen's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$151m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Stolt-Nielsen to produce a higher profit next year, all else being equal.

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 Stolt-Nielsen's Profit Performance

Unusual items (expenses) detracted from Stolt-Nielsen's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Stolt-Nielsen's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Stolt-Nielsen has 3 warning signs and it would be unwise to ignore them.

This note has only looked at a single factor that sheds light on the nature of Stolt-Nielsen's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 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.