12 hours ago
We Think You Can Look Beyond 1&1's (ETR:1U1) Lackluster Earnings
Soft earnings didn't appear to concern 1&1 AG's (ETR:1U1) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.
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How Do Unusual Items Influence Profit?
To properly understand 1&1's profit results, we need to consider the €281m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. In the twelve months to June 2025, 1&1 had a big unusual items expense. 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 1&1's Profit Performance
As we mentioned previously, the 1&1's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that 1&1's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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 1&1, you'd also look into what risks it is currently facing. For example - 1&1 has 2 warning signs we think you should be aware of.
This note has only looked at a single factor that sheds light on the nature of 1&1's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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.
