I
nstone Real Estate Group SE's (ETR:INS) solid earnings report led to a surge in stock price, but our analysis reveals some concerns for shareholders. The company's profit numbers were impressive, yet we've identified factors that warrant attention. Meanwhile, AI is poised to revolutionize healthcare, with 20 under-the-radar stocks working on diagnostics and drug discovery, all with market caps under $10 billion.

    The accrual ratio from cash flow is a key metric for assessing free cash flow (FCF) alignment with profit. A negative ratio indicates that FCF exceeds statutory profit, which was the case for Instone Real Estate Group in its year-end report. With an accrual ratio of -0.11, the company generated €113m in FCF, dwarfing its reported profit of €35.9m.

    However, free cash flow did decline year-over-year, a less-than-ideal trend. The accrual ratio is partly influenced by unusual items that boosted statutory profit by €4.4m in the last twelve months. While higher profits are generally optimistic, we'd prefer sustainable growth. Assuming those one-off items don't recur, we expect weaker profit next year, absent business growth.