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The market for Jardine Matheson Holdings Limited's (SGX:J36) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
See our latest analysis for Jardine Matheson Holdings
The Impact Of Unusual Items On Profit
For anyone who wants to understand Jardine Matheson Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$1.8b 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. Jardine Matheson Holdings took a rather significant hit from unusual items in the year to June 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.
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 Jardine Matheson Holdings' Profit Performance
As we discussed above, we think the significant unusual expense will make Jardine Matheson Holdings' statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Jardine Matheson Holdings' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over 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. If you'd like to know more about Jardine Matheson Holdings as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 4 warning signs for Jardine Matheson Holdings you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of Jardine Matheson Holdings' 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. 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.