Cahya Mata Sarawak Berhad's (KLSE:CMSB) healthy profit numbers didn't contain any surprises for investors. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.
We've discovered 1 warning sign about Cahya Mata Sarawak Berhad. View them for free.
How Do Unusual Items Influence Profit?
For anyone who wants to understand Cahya Mata Sarawak Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from RM13m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
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 Cahya Mata Sarawak Berhad's Profit Performance
Arguably, Cahya Mata Sarawak Berhad's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Cahya Mata Sarawak Berhad's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 12% in the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Cahya Mata Sarawak Berhad at this point in time. For example - Cahya Mata Sarawak Berhad has 1 warning sign we think you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of Cahya Mata Sarawak 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. 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.
