Robust Earnings May Not Tell The Whole Story For Millicom International Cellular (NASDAQ:TIGO)

Despite posting some strong earnings, the market for Millicom International Cellular S.A.'s (NASDAQ:TIGO) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

View our latest analysis for Millicom International Cellular

The Impact Of Unusual Items On Profit

For anyone who wants to understand Millicom International Cellular's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$683m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. We can see that Millicom International Cellular's positive unusual items were quite significant relative to its profit in the year to December 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 Millicom International Cellular's Profit Performance

As previously mentioned, Millicom International Cellular's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Millicom International Cellular's underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after 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. If you want to do dive deeper into Millicom International Cellular, you'd also look into what risks it is currently facing. Case in point: We've spotted 4 warning signs for Millicom International Cellular you should be mindful of and 2 of these are a bit unpleasant.

Today we've zoomed in on a single data point to better understand the nature of Millicom International Cellular'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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.