Multiply Group PJSC's (ADX:MULTIPLY) Soft Earnings Don't Show The Whole Picture

Soft earnings didn't appear to concern Multiply Group PJSC's (ADX:MULTIPLY) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Multiply Group PJSC

How Do Unusual Items Influence Profit?

For anyone who wants to understand Multiply Group PJSC's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by د.إ563m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Multiply Group PJSC took a rather significant hit from unusual items in the year to December 2023. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Multiply Group PJSC.

Our Take On Multiply Group PJSC's Profit Performance

As we mentioned previously, the Multiply Group PJSC's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Multiply Group PJSC's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Multiply Group PJSC, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Multiply Group PJSC you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Multiply Group PJSC's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 that insiders are buying 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.