Despite some strong returns, the market for Paul Hartmann AG (FRA:PHH2) hasn’t moved much. We did a little digging and found some worrying factors in the details.
Check out our latest analysis on Paul Hartmann
The impact of unusual items on profit
Importantly, our data shows that Paul Hartmann’s profit was boosted by €4.9 million last year due to 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. We have reviewed the numbers of most listed companies globally and it is very common for unusual items to be one-off in nature. And that is exactly what the accounting terminology implies. Therefore, assuming these unusual items do not reappear in the current year, we would expect next year’s profit to be weaker (i.e. in the absence of business growth).
Note: We always recommend that investors check the strength of the balance sheet. Click here to access our balance sheet analysis of Paul Hartmann.
Our assessment of Paul Hartmann’s earnings development
One could argue that Paul Hartmann’s statutory result has been distorted by unusual items that boost profit. Therefore, it seems possible to us that Paul Hartmann’s true underlying earnings power is actually lower than its statutory profit. But the good news is that while we need to look beyond the statutory numbers, these numbers are still improving, with earnings per share growing very strongly over the last year. Of course, we’ve only just scratched the surface when analyzing the result; one could also consider margins, forecast growth and return on capital, among other things. If you want to dive deeper into Paul Hartmann, you should also examine what risks the company is currently facing. For example: Paul Hartmann has 1 warning sign In our opinion, you should be aware of this.
This note has only examined a single factor that can shed light on the nature of Paul Hartmann’s earnings. But there is always more to discover if you can focus on the details. For example, many people consider a high return on equity to indicate a favorable business situation, while others like to “follow the money” and look for stocks that insiders are buying. You might want to check this out. free Collection of companies with high return on equity or this list of stocks with high insider ownership.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
