Some Investors May Be Willing To Look Past Fresenius Medical Care’s (ETR:FME) Soft Earnings

Investors were disappointed with the weak earnings posted by Fresenius Medical Care AG (ETR:FME ). Despite the soft profit numbers, our analysis has optimism about the overall quality of the income statement.

View our latest analysis for Fresenius Medical Care

The Impact Of Unusual Items On Profit

For anyone who wants to understand Fresenius Medical Care’s profit beyond the statutory numbers, it’s important to note that during the last twelve months statutory profit was reduced by €257m 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 that’s hardly a surprise given these line items are considered unusual. If Fresenius Medical Care 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. Fortunately, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Fresenius Medical Care’s Profit Performance

Because unusual items detracted from Fresenius Medical Care’s earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Fresenius Medical Care’s statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the 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’d like to know more about Fresenius Medical Care as a business, it’s important to be aware of any risks it’s facing. For example – Fresenius Medical Care has 1 warning sign we think you should be aware of.

Today we’ve zoomed in on a single data point to better understand the nature of Fresenius Medical Care’s profit. But there is always more to discover if you are capable of focusing your mind on minutiae. 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 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.

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