Cyrela Brazil Realty Empreendimentos e Participações' (BVMF:CYRE3) Earnings May Just Be The Starting Point

The subdued stock price reaction suggests that Cyrela Brazil Realty S.A. Empreendimentos e Participações' (BVMF:CYRE3) strong earnings didn't offer any surprises. Our analysis suggests that investors might be missing some promising details.

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The Impact Of Unusual Items On Profit

For anyone who wants to understand Cyrela Brazil Realty Empreendimentos e Participações' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by R$179m due 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Cyrela Brazil Realty Empreendimentos e Participações to produce a higher profit next year, all else being equal.

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

Because unusual items detracted from Cyrela Brazil Realty Empreendimentos e Participações' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Cyrela Brazil Realty Empreendimentos e Participações' statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. 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. So while earnings quality is important, it's equally important to consider the risks facing Cyrela Brazil Realty Empreendimentos e Participações at this point in time. In terms of investment risks, we've identified 1 warning sign with Cyrela Brazil Realty Empreendimentos e Participações, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand 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. 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 with high insider ownership.

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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.