Impact Developer & Contractor's (BVB:IMP) Earnings Are Weaker Than They Seem

Unsurprisingly, Impact Developer & Contractor S.A.'s (BVB:IMP) stock price was strong on the back of its healthy earnings report. We did some analysis and think that investors are missing some details hidden beneath the profit numbers.

View our latest analysis for Impact Developer & Contractor

How Do Unusual Items Influence Profit?

To properly understand Impact Developer & Contractor's profit results, we need to consider the RON28m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Impact Developer & Contractor had a rather significant contribution from unusual items relative to its profit to December 2024. 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 Impact Developer & Contractor.

Our Take On Impact Developer & Contractor's Profit Performance

As we discussed above, we think the significant positive unusual item makes Impact Developer & Contractor's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Impact Developer & Contractor's underlying earnings power is lower than its statutory profit. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Impact Developer & Contractor (including 1 which makes us a bit uncomfortable).

This note has only looked at a single factor that sheds light on the nature of Impact Developer & Contractor'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 with significant insider holdings 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.