Shareholders appeared unconcerned with AV Concept Holdings Limited's (HKG:595) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.
Check out our latest analysis for AV Concept Holdings
SEHK:595 Earnings and Revenue History August 4th 2022The Impact Of Unusual Items On Profit
Importantly, our data indicates that AV Concept Holdings' profit was reduced by HK$6.1m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect AV Concept Holdings to produce a higher profit next year, all else being equal.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of AV Concept Holdings.
Our Take On AV Concept Holdings' Profit Performance
Unusual items (expenses) detracted from AV Concept Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think AV Concept Holdings' earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 2 warning signs for AV Concept Holdings and you'll want to know about these.
This note has only looked at a single factor that sheds light on the nature of AV Concept Holdings' 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 that insiders are buying.
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.