Kallebäck Property Invest's (STO:KAPIAB) Conservative Accounting Might Explain Soft Earnings

The market for Kallebäck Property Invest AB (publ)'s (STO:KAPIAB) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Check out our latest analysis for Kallebäck Property Invest

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Kallebäck Property Invest's profit was reduced by kr23m, 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Kallebäck Property Invest 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 Kallebäck Property Invest.

Our Take On Kallebäck Property Invest's Profit Performance

Because unusual items detracted from Kallebäck Property Invest'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 Kallebäck Property Invest'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. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So while earnings quality is important, it's equally important to consider the risks facing Kallebäck Property Invest at this point in time. To that end, you should learn about the 6 warning signs we've spotted with Kallebäck Property Invest (including 3 which are a bit unpleasant).

Today we've zoomed in on a single data point to better understand the nature of Kallebäck Property Invest's profit. But there are plenty of other ways to inform your opinion of a company. 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.