Domain Costa Lazaridi's (ATH:KTILA) Solid Earnings May Rest On Weak Foundations

Domain Costa Lazaridi S.A.'s (ATH:KTILA) robust recent earnings didn't do much to move the stock. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

See our latest analysis for Domain Costa Lazaridi

How Do Unusual Items Influence Profit?

To properly understand Domain Costa Lazaridi's profit results, we need to consider the €4.0m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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'. We can see that Domain Costa Lazaridi's positive unusual items were quite significant relative to its profit in the year to June 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Domain Costa Lazaridi.

Our Take On Domain Costa Lazaridi's Profit Performance

As previously mentioned, Domain Costa Lazaridi's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Domain Costa Lazaridi's underlying earnings power is lower than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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. If you want to do dive deeper into Domain Costa Lazaridi, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Domain Costa Lazaridi and you'll want to know about these bad boys.

This note has only looked at a single factor that sheds light on the nature of Domain Costa Lazaridi'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 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.