Some Investors May Be Willing To Look Past Regina Miracle International (Holdings)'s (HKG:2199) Soft Earnings

Shareholders appeared unconcerned with Regina Miracle International (Holdings) Limited's (HKG:2199) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

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$118m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Regina Miracle International (Holdings) doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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! And on top of that, its earnings per share have grown at 53% per year over the last three years. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 3 warning signs for Regina Miracle International (Holdings) (of which 1 can't be ignored!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Regina Miracle International (Holdings)'s profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. 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. 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.