Shareholders appeared unconcerned with Landrich Holding Limited's (HKG:2132) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
View our latest analysis for Landrich Holding
How Do Unusual Items Influence Profit?
To properly understand Landrich Holding's profit results, we need to consider the HK$13m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Landrich Holding doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Landrich Holding.
Our Take On Landrich Holding's Profit Performance
Unusual items (expenses) detracted from Landrich Holding's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Landrich Holding's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 4 warning signs for Landrich Holding (1 is concerning) you should be familiar with.
Today we've zoomed in on a single data point to better understand the nature of Landrich Holding's profit. But there are plenty of other ways to inform your opinion of a company. 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.