The market for The Cross-Harbour (Holdings) Limited's (HKG:32) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for Cross-Harbour (Holdings)

How Do Unusual Items Influence Profit?

To properly understand Cross-Harbour (Holdings)'s profit results, we need to consider the HK$2.6m 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 2023, Cross-Harbour (Holdings) had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Cross-Harbour (Holdings).

Our Take On Cross-Harbour (Holdings)'s Profit Performance

As we mentioned previously, the Cross-Harbour (Holdings)'s profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Cross-Harbour (Holdings)'s statutory profit actually understates its earnings potential! And it's also positive that 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. If you want to do dive deeper into Cross-Harbour (Holdings), you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Cross-Harbour (Holdings) you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Cross-Harbour (Holdings)'s profit. But there are plenty of other ways to inform your opinion of a company. 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.

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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.