Some Investors May Be Willing To Look Past Al Khaleej Investment P.J.S.C's (ADX:KICO) Soft Earnings

The market for Al Khaleej Investment P.J.S.C.'s (ADX:KICO) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

See our latest analysis for Al Khaleej Investment P.J.S.C

How Do Unusual Items Influence Profit?

For anyone who wants to understand Al Khaleej Investment P.J.S.C's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by د.إ2.9m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Al Khaleej Investment P.J.S.C doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Al Khaleej Investment P.J.S.C.

Our Take On Al Khaleej Investment P.J.S.C's Profit Performance

Unusual items (expenses) detracted from Al Khaleej Investment P.J.S.C's earnings over the last year, but we might see an improvement next year. Because of this, we think Al Khaleej Investment P.J.S.C's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. 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. To that end, you should learn about the 4 warning signs we've spotted with Al Khaleej Investment P.J.S.C (including 1 which makes us a bit uncomfortable).

Today we've zoomed in on a single data point to better understand the nature of Al Khaleej Investment P.J.S.C's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.