Stock Analysis

EPH European Property Holdings' (VTX:EPH) Problems Go Beyond Weak Profit

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EPH European Property Holdings PLC's (VTX:EPH) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for EPH European Property Holdings

SWX:EPH Earnings and Revenue History May 5th 2023

How Do Unusual Items Influence Profit?

For anyone who wants to understand EPH European Property Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from €30m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that EPH European Property Holdings' positive unusual items were quite significant relative to its profit in the year to December 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of EPH European Property Holdings.

Our Take On EPH European Property Holdings' Profit Performance

As previously mentioned, EPH European Property Holdings' large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that EPH European Property Holdings' underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. If you want to do dive deeper into EPH European Property Holdings, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with EPH European Property Holdings (including 1 which makes us a bit uncomfortable).

This note has only looked at a single factor that sheds light on the nature of EPH European Property Holdings' 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.

Valuation is complex, but we're helping make it simple.

Find out whether EPH European Property Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.


EPH European Property Holdings

EPH European Property Holdings PLC (former “EPH European Property Holdings Limited” (26 June 2020 – 7 February 2022) and “Eastern Property Holdings Ltd.” (from foundation up to June 2020 )) (the “Company”, “EPH”) is a limited liability company incorporated and domiciled in Cyprus (before 7 February 2022, in British Virgin Islands) whose shares are publicly traded on the SIX Swiss Exchange.

Worrying balance sheet with weak fundamentals.