Cyrela Brazil Realty Empreendimentos e Participações' (BVMF:CYRE3) Strong Earnings Are Of Good Quality

Even though Cyrela Brazil Realty S.A. Empreendimentos e Participações (BVMF:CYRE3 ) posted strong earnings, investors appeared to be underwhelmed. We did some digging and actually think they are being unnecessarily pessimistic.

View our latest analysis for Cyrela Brazil Realty Empreendimentos e Participações

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Cyrela Brazil Realty Empreendimentos e Participações' profit was reduced by R$134m, 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. If Cyrela Brazil Realty Empreendimentos e Participações doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Cyrela Brazil Realty Empreendimentos e Participações' Profit Performance

Unusual items (expenses) detracted from Cyrela Brazil Realty Empreendimentos e Participações' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Cyrela Brazil Realty Empreendimentos e Participações' statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 50% per year over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Obviously, we love to consider the historical data to inform our opinion of a company. But it can be really valuable to consider what other analysts are forecasting. So feel free to check out our free graph representing analyst forecasts.

This note has only looked at a single factor that sheds light on the nature of Cyrela Brazil Realty Empreendimentos e Participações' 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. 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 with significant insider holdings 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.