National Cement Company (Public Shareholding) (DFM:NCC) Strong Profits May Be Masking Some Underlying Issues

National Cement Company (Public Shareholding Co.)'s (DFM:NCC) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

We've discovered 2 warning signs about National Cement Company (Public Shareholding). View them for free.

How Do Unusual Items Influence Profit?

For anyone who wants to understand National Cement Company (Public Shareholding)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from د.إ2.8m worth of unusual items. 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. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of National Cement Company (Public Shareholding).

Our Take On National Cement Company (Public Shareholding)'s Profit Performance

We'd posit that National Cement Company (Public Shareholding)'s statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that National Cement Company (Public Shareholding)'s true underlying earnings power is actually less than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 2 warning signs for National Cement Company (Public Shareholding) (1 is potentially serious) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of National Cement Company (Public Shareholding)'s profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.