Are PJSC Tatneft's (MCX:TATN) Statutory Earnings A Good Guide To Its Underlying Profitability?

By
Simply Wall St
Published
February 10, 2021
MISX:TATN
Source: Shutterstock

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. Today we'll focus on whether this year's statutory profits are a good guide to understanding PJSC Tatneft (MCX:TATN).

It's good to see that over the last twelve months PJSC Tatneft made a profit of ₽98.1b on revenue of ₽762.8b. As you can see in the chart below, its profit has declined over the last three years, even though its revenue has increased.

Check out our latest analysis for PJSC Tatneft

earnings-and-revenue-history
MISX:TATN Earnings and Revenue History February 11th 2021

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will focus on the impact unusual items have had on PJSC Tatneft's statutory earnings. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that PJSC Tatneft's profit was reduced by ₽44b, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If PJSC Tatneft doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On PJSC Tatneft's Profit Performance

Because unusual items detracted from PJSC Tatneft'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 PJSC Tatneft'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'd like to know more about PJSC Tatneft as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for PJSC Tatneft and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of PJSC Tatneft'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. 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. 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.