Harboes Bryggeri's (CPH:HARB B) Weak Earnings May Only Reveal A Part Of The Whole Picture

A lackluster earnings announcement from Harboes Bryggeri A/S (CPH:HARB B) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Harboes Bryggeri's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from kr.7.2m worth of unusual items. 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 crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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

Our Take On Harboes Bryggeri's Profit Performance

Arguably, Harboes Bryggeri's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Harboes Bryggeri's statutory profits are better than its underlying earnings power. 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'd like to know more about Harboes Bryggeri 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 Harboes Bryggeri, and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Harboes Bryggeri's 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.