The market was pleased with the recent earnings report from Vertu Motors plc (LON:VTU), despite the profit numbers being soft. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for Vertu Motors

How Do Unusual Items Influence Profit?

For anyone who wants to understand Vertu Motors' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by UK￡66m 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, after all, that's exactly what the accounting terminology implies. Vertu Motors took a rather significant hit from unusual items in the year to August 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 Vertu Motors' Profit Performance

As we mentioned previously, the Vertu Motors' profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Vertu Motors' statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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 Vertu Motors as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with Vertu Motors, and understanding these should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Vertu Motors' profit. But there are plenty of other ways to inform your opinion of a company. 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.