LU-VE's (BIT:LUVE) Soft Earnings Are Actually Better Than They Appear

LU-VE S.p.A.'s (BIT:LUVE) 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 LU-VE

The Impact Of Unusual Items On Profit

To properly understand LU-VE's profit results, we need to consider the €9.1m expense attributed 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, after all, that's exactly what the accounting terminology implies. If LU-VE 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 LU-VE's Profit Performance

Unusual items (expenses) detracted from LU-VE's earnings over the last year, but we might see an improvement next year. Because of this, we think LU-VE's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 59% annually, 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 4 warning signs for LU-VE (of which 1 can't be ignored!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of LU-VE'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. 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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