Ghitha Holding P.J.S.C's (ADX:GHITHA) Soft Earnings Don't Show The Whole Picture

Shareholders appeared unconcerned with Ghitha Holding P.J.S.C's (ADX:GHITHA) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for Ghitha Holding P.J.S.C

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Ghitha Holding P.J.S.C's profit was reduced by د.إ108m, 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. 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. In the twelve months to December 2023, Ghitha Holding P.J.S.C had a big unusual items expense. 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 Ghitha Holding P.J.S.C.

Our Take On Ghitha Holding P.J.S.C's Profit Performance

As we discussed above, we think the significant unusual expense will make Ghitha Holding P.J.S.C's statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Ghitha Holding P.J.S.C's statutory profit actually understates its earnings potential! And we are pleased to note that EPS is at least heading in the right direction over the last three years. 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 want to do dive deeper into Ghitha Holding P.J.S.C, you'd also look into what risks it is currently facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Ghitha Holding P.J.S.C.

This note has only looked at a single factor that sheds light on the nature of Ghitha Holding P.J.S.C'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 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.