The subdued market reaction suggests that Safe Bulkers, Inc.'s (NYSE:SB) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.
The Impact Of Unusual Items On Profit
For anyone who wants to understand Safe Bulkers' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$10m worth of 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 ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Safe Bulkers doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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 Safe Bulkers' Profit Performance
Arguably, Safe Bulkers' statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Safe Bulkers' true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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 Safe Bulkers, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 3 warning signs for Safe Bulkers and you'll want to know about them.
This note has only looked at a single factor that sheds light on the nature of Safe Bulkers' 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. 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 that insiders are buying 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.