We Like The Quality Of CK Infrastructure Holdings' (HKG:1038) Earnings

The market seemed underwhelmed by last week's earnings announcement from CK Infrastructure Holdings Limited (HKG:1038) despite the healthy numbers. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

Check out our latest analysis for CK Infrastructure Holdings

The Impact Of Unusual Items On Profit

To properly understand CK Infrastructure Holdings' profit results, we need to consider the HK$438m expense attributed to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect CK Infrastructure 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 CK Infrastructure Holdings' Profit Performance

Unusual items (expenses) detracted from CK Infrastructure Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think CK Infrastructure Holdings' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 9.7% 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. At Simply Wall St, we found 1 warning sign for CK Infrastructure Holdings and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of CK Infrastructure Holdings' 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. 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.