We Think Vassiliko Cement Works' (CSE:VCW) Solid Earnings Are Understated

The market seemed underwhelmed by the solid earnings posted by Vassiliko Cement Works Public Company Ltd (CSE:VCW) recently. Along with the solid headline numbers, we think that investors have some reasons for optimism.

View our latest analysis for Vassiliko Cement Works

How Do Unusual Items Influence Profit?

For anyone who wants to understand Vassiliko Cement Works' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €5.1m 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. If Vassiliko Cement Works doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On Vassiliko Cement Works' Profit Performance

Unusual items (expenses) detracted from Vassiliko Cement Works' earnings over the last year, but we might see an improvement next year. Because of this, we think Vassiliko Cement Works' earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 28% annually, over the last three years. 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 Vassiliko Cement Works at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Vassiliko Cement Works.

This note has only looked at a single factor that sheds light on the nature of Vassiliko Cement Works' 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. 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.