Deutsche Lufthansa's (ETR:LHA) Anemic Earnings Might Be Worse Than You Think

Last week's earnings announcement from Deutsche Lufthansa AG (ETR:LHA) was disappointing to investors, with a sluggish profit figure. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Deutsche Lufthansa

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Deutsche Lufthansa's profit received a boost of €182m in unusual items, over the last year. 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'. If Deutsche Lufthansa doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Deutsche Lufthansa's Profit Performance

Arguably, Deutsche Lufthansa's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Deutsche Lufthansa's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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 Deutsche Lufthansa as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Deutsche Lufthansa, and understanding them should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Deutsche Lufthansa's 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. 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 with significant insider holdings to be useful.

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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.