Are Ras Al Khaimah for White Cement & Construction Materials P.S.C's (ADX:RAKWCT) 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. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. In this article, we'll look at how useful this year's statutory profit is, when analysing Ras Al Khaimah for White Cement & Construction Materials P.S.C (ADX:RAKWCT).

We like the fact that Ras Al Khaimah for White Cement & Construction Materials P.S.C made a profit of د.إ5.29m on its revenue of د.إ204.5m, in the last year. Below, you can see that both its revenue and its profit have fallen over the last three years.

View our latest analysis for Ras Al Khaimah for White Cement & Construction Materials P.S.C

Of course, it is only sensible to look beyond the statutory profits and question how well those numbers represent the sustainable earnings power of the business. This article will discuss how unusual items have impacted Ras Al Khaimah for White Cement & Construction Materials P.S.C's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ras Al Khaimah for White Cement & Construction Materials P.S.C.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Ras Al Khaimah for White Cement & Construction Materials P.S.C's profit received a boost of د.إ436k in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If Ras Al Khaimah for White Cement & Construction Materials P.S.C doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Our Take On Ras Al Khaimah for White Cement & Construction Materials P.S.C's Profit Performance

Arguably, Ras Al Khaimah for White Cement & Construction Materials P.S.C's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Ras Al Khaimah for White Cement & Construction Materials P.S.C's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Ras Al Khaimah for White Cement & Construction Materials P.S.C has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Ras Al Khaimah for White Cement & Construction Materials P.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.

When trading Ras Al Khaimah for White Cement & Construction Materials P.S.C or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.