Aqua Spólka Akcyjna's (WSE:AQU) Sluggish Earnings Might Be Just The Beginning Of Its Problems

The subdued market reaction suggests that Aqua Spólka Akcyjna's (WSE:AQU) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for Aqua Spólka Akcyjna

The Impact Of Unusual Items On Profit

For anyone who wants to understand Aqua Spólka Akcyjna's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from zł2.7m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. Aqua Spólka Akcyjna had a rather significant contribution from unusual items relative to its profit to December 2023. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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

Our Take On Aqua Spólka Akcyjna's Profit Performance

As we discussed above, we think the significant positive unusual item makes Aqua Spólka Akcyjna's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Aqua Spólka Akcyjna's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. To help with this, we've discovered 3 warning signs (1 doesn't sit too well with us!) that you ought to be aware of before buying any shares in Aqua Spólka Akcyjna.

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