Shareholders Can Be Confident That Wallenius Wilhelmsen's (OB:WAWI) Earnings Are High Quality

Wallenius Wilhelmsen ASA (OB:WAWI) just reported healthy earnings but the stock price didn't move much. We think that investors have missed some encouraging factors underlying the profit figures.

View our latest analysis for Wallenius Wilhelmsen

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Wallenius Wilhelmsen's profit was reduced by US$62m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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 Wallenius Wilhelmsen 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 Wallenius Wilhelmsen's Profit Performance

Unusual items (expenses) detracted from Wallenius Wilhelmsen's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Wallenius Wilhelmsen's statutory profit actually understates its earnings potential! And it's also positive that 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'd like to know more about Wallenius Wilhelmsen as a business, it's important to be aware of any risks it's facing. Our analysis shows 3 warning signs for Wallenius Wilhelmsen (1 is a bit concerning!) and we strongly recommend you look at these before investing.

This note has only looked at a single factor that sheds light on the nature of Wallenius Wilhelmsen'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.