Does Makarony Polskie's (WSE:MAK) Statutory Profit Adequately Reflect Its Underlying Profit?

As a general rule, we think profitable companies are less risky than companies that lose money. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. This article will consider whether Makarony Polskie's (WSE:MAK) statutory profits are a good guide to its underlying earnings.

It's good to see that over the last twelve months Makarony Polskie made a profit of zł4.28m on revenue of zł186.0m. As you can see in the chart below, its profit has declined over the last three years, even though its revenue has increased.

View our latest analysis for Makarony Polskie

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will discuss how unusual items have impacted Makarony Polskie's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Makarony Polskie.

The Impact Of Unusual Items On Profit

To properly understand Makarony Polskie's profit results, we need to consider the zł2.6m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Makarony Polskie to produce a higher profit next year, all else being equal.

Our Take On Makarony Polskie's Profit Performance

Because unusual items detracted from Makarony Polskie's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Makarony Polskie's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. 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. If you want to do dive deeper into Makarony Polskie, you'd also look into what risks it is currently facing. For example - Makarony Polskie has 4 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Makarony Polskie'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 that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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