Coca-Cola HBC's (LON:CCH) Performance Is Even Better Than Its Earnings Suggest

When companies post strong earnings, the stock generally performs well, just like Coca-Cola HBC AG's (LON:CCH) stock has recently. We did some digging and found some further encouraging factors that investors will like.

View our latest analysis for Coca-Cola HBC

The Impact Of Unusual Items On Profit

To properly understand Coca-Cola HBC's profit results, we need to consider the €126m expense attributed 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Coca-Cola HBC to produce a higher profit next year, all else being equal.

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 Coca-Cola HBC's Profit Performance

Unusual items (expenses) detracted from Coca-Cola HBC's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Coca-Cola HBC's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 52% per year over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Coca-Cola HBC, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Coca-Cola HBC, 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 Coca-Cola HBC's 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 that insiders are buying.

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.