There May Be Some Bright Spots In L'Occitane International's (HKG:973) Earnings

The market for L'Occitane International S.A.'s (HKG:973) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

Check out our latest analysis for L'Occitane International

How Do Unusual Items Influence Profit?

For anyone who wants to understand L'Occitane International's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by €81m due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. If L'Occitane International 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 L'Occitane International's Profit Performance

Because unusual items detracted from L'Occitane International's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think L'Occitane International's earnings potential is at least as good as it seems, and maybe even better! 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'd like to know more about L'Occitane International as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 3 warning signs for L'Occitane International and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of L'Occitane International'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.

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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.