Why Forbuild's (WSE:BTX) Shaky Earnings Are Just The Beginning Of Its Problems

A lackluster earnings announcement from Forbuild SA (WSE:BTX) last week didn't sink the stock price. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

See our latest analysis for Forbuild

The Impact Of Unusual Items On Profit

For anyone who wants to understand Forbuild's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from zł434k worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Forbuild doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Forbuild.

Our Take On Forbuild's Profit Performance

Arguably, Forbuild's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Forbuild's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 48% 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. If you want to do dive deeper into Forbuild, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 3 warning signs with Forbuild, and understanding them should be part of your investment process.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.