The most recent earnings report from Heidelberg Materials AG (ETR:HEI) was disappointing for shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand Heidelberg Materials' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €348m 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 Heidelberg Materials 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. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Heidelberg Materials' Profit Performance

Unusual items (expenses) detracted from Heidelberg Materials' earnings over the last year, but we might see an improvement next year. Because of this, we think Heidelberg Materials' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 5.7% per year over the last three years. 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 Heidelberg Materials as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Heidelberg Materials you should know about.

Today we've zoomed in on a single data point to better understand the nature of Heidelberg Materials' 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 with significant insider holdings to be useful.

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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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