FP: Francotyp-Postalia Holding's (ETR:FPH) Solid Profits Have Weak Fundamentals

Despite posting some strong earnings, the market for Francotyp-Postalia Holding AG's ( ETR:FPH ) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers. View our latest analysis for Francotyp-Postalia Holding An Unusual Tax Situation We can see that Francotyp-Postalia Holding received a tax benefit of €1.6m. This is meaningful because companies usually pay tax rather than receive tax benefits. We're sure the company was pleased with its tax benefit. However, our data indicates that tax benefits can temporarily boost statutory profit in the year it is booked, but subsequently profit may fall back. In the likely event the tax benefit is not repeated, we'd expect to see its statutory profit levels drop, at least in the absence of strong growth. While we think it's good that the company has booked a tax benefit, it does mean that there's every chance the statutory profit will come in a lot higher than it would be if the income was adjusted for one-off factors. 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 Francotyp-Postalia Holding's Profit Performance Francotyp-Postalia Holding reported that it received a tax benefit, rather than paid tax, in its last report. As a result we don't think its profit result, which includes that tax-boost, is a good guide to its sustainable profit levels. Because of this, we think that it may be that Francotyp-Postalia Holding's statutory profits are better than its underlying earnings power. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate 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 want to do dive deeper into Francotyp-Postalia Holding, you'd also look into what risks it is currently facing. For example, we've found that Francotyp-Postalia Holding has 2 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis. Today we've zoomed in on a single data point to better understand the nature of Francotyp-Postalia Holding's 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. 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 . Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.