Great Harvest Maeta Holdings Limited's (HKG:3683) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.
See our latest analysis for Great Harvest Maeta HoldingsSEHK:3683 Earnings and Revenue History September 5th 2022
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Great Harvest Maeta Holdings' profit received a boost of US$19m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. Great Harvest Maeta Holdings had a rather significant contribution from unusual items relative to its profit to March 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Great Harvest Maeta Holdings.
Our Take On Great Harvest Maeta Holdings' Profit Performance
As we discussed above, we think the significant positive unusual item makes Great Harvest Maeta Holdings' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Great Harvest Maeta Holdings' underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, Great Harvest Maeta Holdings has 4 warning signs (and 2 which are a bit concerning) we think you should know about.
Today we've zoomed in on a single data point to better understand the nature of Great Harvest Maeta Holdings' 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. 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.
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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.