The market for RCI Hospitality Holdings, Inc.'s (NASDAQ:RICK) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

See our latest analysis for RCI Hospitality Holdings

How Do Unusual Items Influence Profit?

Importantly, our data indicates that RCI Hospitality Holdings' profit was reduced by US$19m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. RCI Hospitality Holdings took a rather significant hit from unusual items in the year to June 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 RCI Hospitality Holdings' Profit Performance

As we mentioned previously, the RCI Hospitality Holdings' profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that RCI Hospitality Holdings' statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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 RCI Hospitality Holdings as a business, it's important to be aware of any risks it's facing. Our analysis shows 3 warning signs for RCI Hospitality Holdings (1 is potentially serious!) and we strongly recommend you look at these bad boys before investing.

This note has only looked at a single factor that sheds light on the nature of RCI Hospitality Holdings' 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. 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 with significant insider holdings 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.