We Think That There Are Issues Underlying Autoventil a.d's (BELEX:AVEN) Earnings

Autoventil a.d.'s (BELEX:AVEN) stock was strong after they recently reported robust earnings. However, we think that shareholders may be missing some concerning details in the numbers.

View our latest analysis for Autoventil a.d

How Do Unusual Items Influence Profit?

For anyone who wants to understand Autoventil a.d's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from дин40m 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. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. Autoventil a.d had a rather significant contribution from unusual items relative to its profit to June 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 Autoventil a.d.

Our Take On Autoventil a.d's Profit Performance

As we discussed above, we think the significant positive unusual item makes Autoventil a.d's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Autoventil a.d's underlying earnings power is lower than its statutory profit. The good news is that, its earnings per share increased by 53% in the last year. 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. For instance, we've identified 3 warning signs for Autoventil a.d (2 are a bit unpleasant) you should be familiar with.

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