Halmslätten Fastighets' (NGM:HALMEN) Shareholders Have More To Worry About Than Only Soft Earnings

The subdued market reaction suggests that Halmslätten Fastighets AB (publ)'s (NGM:HALMEN) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

View our latest analysis for Halmslätten Fastighets

How Do Unusual Items Influence Profit?

For anyone who wants to understand Halmslätten Fastighets' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from kr20m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. We can see that Halmslätten Fastighets' positive unusual items were quite significant relative to its profit in the year to March 2021. 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 Halmslätten Fastighets.

Our Take On Halmslätten Fastighets' Profit Performance

As we discussed above, we think the significant positive unusual item makes Halmslätten Fastighets' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Halmslätten Fastighets' underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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 Halmslätten Fastighets as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 5 warning signs for Halmslätten Fastighets you should be mindful of and 2 of these make us uncomfortable.

Today we've zoomed in on a single data point to better understand the nature of Halmslätten Fastighets' 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. 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. 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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