National Cement Company (Public Shareholding)'s (DFM:NCC) Promising Earnings May Rest On Soft Foundations

National Cement Company (Public Shareholding Co.) (DFM:NCC) announced strong profits, but the stock was stagnant. We did some digging, and we found some concerning factors in the details.

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The Impact Of Unusual Items On 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.إ787k worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. If National Cement Company (Public Shareholding) doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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

Arguably, National Cement Company (Public Shareholding)'s statutory earnings have been distorted by unusual items boosting profit. 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 on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about National Cement Company (Public Shareholding) as a business, it's important to be aware of any risks it's facing. Be aware that National Cement Company (Public Shareholding) is showing 2 warning signs in our investment analysis and 1 of those is a bit unpleasant...

Today we've zoomed in on a single data point to better understand the nature of National Cement Company (Public Shareholding)'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. 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.