Shareholders appeared unconcerned with Regina Miracle International (Holdings) Limited's (HKG:2199) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Regina Miracle International (Holdings)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by HK$174m due 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Regina Miracle International (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 Regina Miracle International (Holdings)'s Profit Performance

Because unusual items detracted from Regina Miracle International (Holdings)'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 Regina Miracle International (Holdings)'s 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 14% per year over the last three years. 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 Regina Miracle International (Holdings) as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Regina Miracle International (Holdings) (of which 1 is a bit concerning!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Regina Miracle International (Holdings)'s profit. But there are plenty of other ways to inform your opinion of a company. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com