Investors Can Find Comfort In Regina Miracle International (Holdings)'s (HKG:2199) Earnings Quality

Regina Miracle International (Holdings) Limited's (HKG:2199) stock was strong despite it releasing a soft earnings report last week. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

See our latest analysis for Regina Miracle International (Holdings)

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Regina Miracle International (Holdings)'s profit was reduced by HK$206m, due to unusual items, over the last year. 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 Regina Miracle International (Holdings) 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 Regina Miracle International (Holdings)'s Profit Performance

Unusual items (expenses) detracted from Regina Miracle International (Holdings)'s earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Regina Miracle International (Holdings)'s statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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 Regina Miracle International (Holdings), you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Regina Miracle International (Holdings) (1 makes us a bit uncomfortable) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Regina Miracle International (Holdings)'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.