Stock Analysis

Constellium (NYSE:CSTM) Is Posting Promising Earnings But The Good News Doesn’t Stop There

  •  Updated
NYSE:CSTM
Source: Shutterstock

The market seemed underwhelmed by last week's earnings announcement from Constellium SE (NYSE:CSTM) despite the healthy numbers. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

Check out our latest analysis for Constellium

earnings-and-revenue-history
NYSE:CSTM Earnings and Revenue History May 5th 2021

The Impact Of Unusual Items On Profit

For anyone who wants to understand Constellium's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €65m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Constellium to produce a higher profit next year, all else being equal.

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 Constellium's Profit Performance

Unusual items (expenses) detracted from Constellium's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Constellium's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 3 warning signs for Constellium (1 is significant!) that we believe deserve your full attention.

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

If you’re looking to trade Constellium, 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


Valuation is complex, but we're helping make it simple.

Find out whether Constellium is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis