Earnings Troubles May Signal Larger Issues for Caxton and CTP Publishers and Printers (JSE:CAT) Shareholders

Caxton and CTP Publishers and Printers Limited's (JSE:CAT) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Caxton and CTP Publishers and Printers

How Do Unusual Items Influence Profit?

For anyone who wants to understand Caxton and CTP Publishers and Printers' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from R64m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Caxton and CTP Publishers and Printers 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 Caxton and CTP Publishers and Printers.

Our Take On Caxton and CTP Publishers and Printers' Profit Performance

We'd posit that Caxton and CTP Publishers and Printers' statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Caxton and CTP Publishers and Printers' true underlying earnings power is actually less than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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 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 1 warning sign for Caxton and CTP Publishers and Printers you should know about.

This note has only looked at a single factor that sheds light on the nature of Caxton and CTP Publishers and Printers' 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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.