Statutory Profit Doesn't Reflect How Good Ardagh Group's (NYSE:ARD) Earnings Are

By
Simply Wall St
Published
February 23, 2021
NYSE:ARD

Ardagh Group S.A.'s (NYSE:ARD) strong earnings report was rewarded with a positive stock price move. We did some digging and found some further encouraging factors that investors will like.

Check out our latest analysis for Ardagh Group

earnings-and-revenue-history
NYSE:ARD Earnings and Revenue History February 23rd 2021

The Impact Of Unusual Items On Profit

For anyone who wants to understand Ardagh Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$132m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If Ardagh Group doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 Ardagh Group's Profit Performance

Unusual items (expenses) detracted from Ardagh Group's earnings over the last year, but we might see an improvement next year. Because of this, we think Ardagh Group's earnings potential is at least as good as it seems, and maybe even better! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 4 warning signs we've spotted with Ardagh Group (including 2 which are a bit unpleasant).

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