Are Dubai Refreshment (P.J.S.C.)'s (DFM:DRC) Statutory Earnings A Good Guide To Its Underlying Profitability?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. In this article, we'll look at how useful this year's statutory profit is, when analysing Dubai Refreshment (P.J.S.C.) (DFM:DRC).

We like the fact that Dubai Refreshment (P.J.S.C.) made a profit of د.إ51.0m on its revenue of د.إ567.3m, in the last year. In the last few years both its revenue and its profit have fallen, as you can see in the chart below.

See our latest analysis for Dubai Refreshment (P.J.S.C.)

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Dubai Refreshment (P.J.S.C.).

Our Take On Dubai Refreshment (P.J.S.C.)'s Profit Performance

Because of this, we think that it may be that Dubai Refreshment (P.J.S.C.)'s statutory profits are better than its underlying earnings power. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 2 warning signs for Dubai Refreshment (P.J.S.C.) (of which 1 shouldn't be ignored!) you should know about.

In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. 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. 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.
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