King's Flair International (Holdings) Limited's (HKG:6822) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.
View our latest analysis for King's Flair International (Holdings)
SEHK:6822 Earnings and Revenue History September 23rd 2022The Impact Of Unusual Items On Profit
To properly understand King's Flair International (Holdings)'s profit results, we need to consider the HK$7.2m gain attributed to unusual items. 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 that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of King's Flair International (Holdings).
Our Take On King's Flair International (Holdings)'s Profit Performance
Arguably, King's Flair International (Holdings)'s statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that King's Flair International (Holdings)'s true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. If you want to do dive deeper into King's Flair International (Holdings), you'd also look into what risks it is currently facing. Be aware that King's Flair International (Holdings) is showing 2 warning signs in our investment analysis and 1 of those is concerning...
Today we've zoomed in on a single data point to better understand the nature of King's Flair International (Holdings)'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. 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 that insiders are buying to be useful.
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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.