Soft earnings didn't appear to concern IRIS Corporation Berhad's (KLSE:IRIS) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
View our latest analysis for IRIS Corporation Berhad
How Do Unusual Items Influence Profit?
For anyone who wants to understand IRIS Corporation Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM10m due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect IRIS Corporation Berhad to produce a higher profit next year, all else being equal.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of IRIS Corporation Berhad.
Our Take On IRIS Corporation Berhad's Profit Performance
Because unusual items detracted from IRIS Corporation Berhad's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that IRIS Corporation Berhad's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. If you'd like to know more about IRIS Corporation Berhad as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for IRIS Corporation Berhad you should know about.
Today we've zoomed in on a single data point to better understand the nature of IRIS Corporation Berhad's 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 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.