We Think That There Are More Issues For Rattler Midstream (NASDAQ:RTLR) Than Just Sluggish Earnings

Simply Wall St
August 11, 2021
Source: Shutterstock

Rattler Midstream LP's (NASDAQ:RTLR) stock showed strength after its weak earnings report. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Rattler Midstream.

View our latest analysis for Rattler Midstream

NasdaqGS:RTLR Earnings and Revenue History August 12th 2021

The Impact Of Unusual Items On Profit

For anyone who wants to understand Rattler Midstream's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$13m 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Rattler Midstream's Profit Performance

Arguably, Rattler Midstream's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Rattler Midstream's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Rattler Midstream.

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

If you’re looking to trade Rattler Midstream, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.