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Soft earnings? Maybe conservative accounting explains UPM-Kymmene Oyj’s (HEL:UPM) story.

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TLDR:

  • UPM-Kymmene Oyj’s earnings announcement was disappointing to shareholders.
  • Unusual expenses reduced the company’s profit by €220m.
  • However, if these expenses don’t recur, higher profits are expected for the next year.
  • The company’s EPS has shrunk in the last twelve months.
  • It’s important to assess risks and other factors when considering this stock.

UPM-Kymmene Oyj, a forest-based bio industry company, recently reported earnings that left shareholders unimpressed. However, there may be some encouraging factors that investors are overlooking. While the headline numbers were soft, it’s important to note that the company’s profit was reduced by €220m due to unusual items over the past year. While this may initially seem disappointing, unusual expenses are often one-time occurrences. Therefore, if these expenses do not recur, UPM-Kymmene Oyj is expected to produce higher profits in the next year.

Despite the reduction in profit over the past year, the company’s earnings potential may be better than it seems. On the other hand, its earnings per share (EPS) has actually shrunk in the last twelve months. It’s important to consider other factors and risks when assessing the company’s potential. For example, investors should take into account any risks the company may be facing.

Valuation of the company is complex, but there are resources available to help investors make informed decisions. UPM-Kymmene Oyj’s potential over or undervaluation can be assessed by analyzing comprehensive analysis reports that include fair value estimates, risks and warnings, dividends, insider transactions, and financial health.

This article by Simply Wall St is for informational purposes only and is not intended to be financial advice. It is based on historical data and analyst forecasts using an unbiased methodology. Investors should conduct their own research and consider their objectives and financial situation before making any investment decisions. The 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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