Naim Holdings Berhad's (KLSE:NAIM) solid earnings announcement recently didn't do much to the stock price. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.
Check out our latest analysis for Naim Holdings Berhad
How Do Unusual Items Influence Profit?
Importantly, our data indicates that Naim Holdings Berhad's profit was reduced by RM2.5m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Naim Holdings 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 Naim Holdings Berhad.
Our Take On Naim Holdings Berhad's Profit Performance
Unusual items (expenses) detracted from Naim Holdings Berhad's earnings over the last year, but we might see an improvement next year. Because of this, we think Naim Holdings Berhad's earnings potential is at least as good as it seems, and maybe even better! Furthermore, it has done a great job growing EPS 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 Naim Holdings Berhad as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Naim Holdings Berhad and you'll want to know about this.
This note has only looked at a single factor that sheds light on the nature of Naim Holdings Berhad'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. 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.