There May Be Underlying Issues With The Quality Of HBR Realty Empreendimentos Imobiliários' (BVMF:HBRE3) Earnings

Investors were disappointed with HBR Realty Empreendimentos Imobiliários S.A.'s (BVMF:HBRE3) earnings, despite the strong profit numbers. Our analysis uncovered some concerning factors that we believe the market might be paying attention to.

View our latest analysis for HBR Realty Empreendimentos Imobiliários

The Impact Of Unusual Items On Profit

Importantly, our data indicates that HBR Realty Empreendimentos Imobiliários' profit received a boost of R$384m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. We can see that HBR Realty Empreendimentos Imobiliários' positive unusual items were quite significant relative to its profit in the year to September 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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 HBR Realty Empreendimentos Imobiliários' Profit Performance

As we discussed above, we think the significant positive unusual item makes HBR Realty Empreendimentos Imobiliários' earnings a poor guide to its underlying profitability. For this reason, we think that HBR Realty Empreendimentos Imobiliários' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The good news is that, its earnings per share increased by 71% in the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing HBR Realty Empreendimentos Imobiliários at this point in time. Be aware that HBR Realty Empreendimentos Imobiliários is showing 4 warning signs in our investment analysis and 2 of those make us uncomfortable...

This note has only looked at a single factor that sheds light on the nature of HBR Realty Empreendimentos Imobiliários' 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 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.