Weak Statutory Earnings May Not Tell The Whole Story For L'azurde Company for Jewelry (TADAWUL:4011)

A lackluster earnings announcement from L'azurde Company for Jewelry (TADAWUL:4011) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for L'azurde Company for Jewelry

How Do Unusual Items Influence Profit?

Importantly, our data indicates that L'azurde Company for Jewelry's profit received a boost of ر.س13m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. If L'azurde Company for Jewelry doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of L'azurde Company for Jewelry.

Our Take On L'azurde Company for Jewelry's Profit Performance

Arguably, L'azurde Company for Jewelry's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that L'azurde Company for Jewelry's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing L'azurde Company for Jewelry at this point in time. Our analysis shows 4 warning signs for L'azurde Company for Jewelry (1 shouldn't be ignored!) and we strongly recommend you look at these before investing.

This note has only looked at a single factor that sheds light on the nature of L'azurde Company for Jewelry'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 with high insider ownership.

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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.