We're Not Counting On Ktima Kostas Lazaridis (ATH:KTILA) To Sustain Its Statutory Profitability

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. Today we'll focus on whether this year's statutory profits are a good guide to understanding Ktima Kostas Lazaridis (ATH:KTILA).

While Ktima Kostas Lazaridis was able to generate revenue of €12.2m in the last twelve months, we think its profit result of €1.88m was more important. In the chart below, you can see that its profit and revenue have both grown over the last three years.

See our latest analysis for Ktima Kostas Lazaridis

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will discuss how unusual items have impacted Ktima Kostas Lazaridis' most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ktima Kostas Lazaridis.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ktima Kostas Lazaridis' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from €2.6m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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'. Ktima Kostas Lazaridis had a rather significant contribution from unusual items relative to its profit to June 2020. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Our Take On Ktima Kostas Lazaridis' Profit Performance

As we discussed above, we think the significant positive unusual item makes Ktima Kostas Lazaridis'earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Ktima Kostas Lazaridis' 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. So while earnings quality is important, it's equally important to consider the risks facing Ktima Kostas Lazaridis at this point in time. While conducting our analysis, we found that Ktima Kostas Lazaridis has 2 warning signs and it would be unwise to ignore them.

Today we've zoomed in on a single data point to better understand the nature of Ktima Kostas Lazaridis' 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.

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This article by Simply Wall St is general in nature. 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.
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