Why Annehem Fastigheter's (STO:ANNE B) Shaky Earnings Are Just The Beginning Of Its Problems

The subdued market reaction suggests that Annehem Fastigheter AB's (STO:ANNE B) recent earnings didn't contain any surprises. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

See our latest analysis for Annehem Fastigheter

How Do Unusual Items Influence Profit?

For anyone who wants to understand Annehem Fastigheter's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from kr58m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. We can see that Annehem Fastigheter's 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.

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.

Our Take On Annehem Fastigheter's Profit Performance

As we discussed above, we think the significant positive unusual item makes Annehem Fastigheter's earnings a poor guide to its underlying profitability. For this reason, we think that Annehem Fastigheter's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. 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 Annehem Fastigheter as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 4 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Annehem Fastigheter.

Today we've zoomed in on a single data point to better understand the nature of Annehem Fastigheter'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 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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