Shareholders Will Be Pleased With The Quality of ATM Grupa's (WSE:ATG) Earnings

The subdued stock price reaction suggests that ATM Grupa S.A.'s (WSE:ATG) strong earnings didn't offer any surprises. Investors are probably missing some underlying factors which are encouraging for the future of the company.

See our latest analysis for ATM Grupa

How Do Unusual Items Influence Profit?

For anyone who wants to understand ATM Grupa's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by zł4.4m due 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. If ATM Grupa doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On ATM Grupa's Profit Performance

Because unusual items detracted from ATM Grupa's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that ATM Grupa's statutory profit actually understates its earnings potential! And the EPS is up 37% over the last twelve months. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For instance, we've identified 3 warning signs for ATM Grupa (1 shouldn't be ignored) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of ATM Grupa'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.