Stock Analysis

Cyprus Cement's (CSE:CCC) Profits Appear To Have Quality Issues

CSE:CCC
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The Cyprus Cement Public Company Limited's (CSE:CCC) robust recent earnings didn't do much to move the stock. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

Check out our latest analysis for Cyprus Cement

earnings-and-revenue-history
CSE:CCC Earnings and Revenue History May 19th 2021

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Cyprus Cement's profit received a boost of €46m 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. We can see that Cyprus Cement's positive unusual items were quite significant relative to its profit in the year to December 2020. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Cyprus Cement.

Our Take On Cyprus Cement's Profit Performance

As we discussed above, we think the significant positive unusual item makes Cyprus Cement's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Cyprus Cement's underlying earnings power is lower than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate 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. If you'd like to know more about Cyprus Cement as a business, it's important to be aware of any risks it's facing. Be aware that Cyprus Cement is showing 5 warning signs in our investment analysis and 1 of those is concerning...

This note has only looked at a single factor that sheds light on the nature of Cyprus Cement's 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. 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 that insiders are buying to be useful.

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