Yahoo Finance Investors Can Find Comfort In Heineken's (AMS:HEIA) Earnings Quality
Investors were disappointed with the weak earnings posted by Heineken N.V. (AMS:HEIA ). Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.
View our latest analysis for Heineken
How Do Unusual Items Influence Profit?
To properly understand Heineken's profit results, we need to consider the €728m expense attributed 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. Assuming those unusual expenses don't come up again, we'd therefore expect Heineken 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 Heineken's Profit Performance
Because unusual items detracted from Heineken's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Heineken's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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. If you want to do dive deeper into Heineken, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Heineken you should be aware of.
This note has only looked at a single factor that sheds light on the nature of Heineken's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
