There May Be Underlying Issues With The Quality Of Al Khaleej Investment P.J.S.C's (ADX:KICO) Earnings

Al Khaleej Investment P.J.S.C.'s (ADX:KICO) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

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

The Impact Of Unusual Items On Profit

To properly understand Al Khaleej Investment P.J.S.C's profit results, we need to consider the د.إ2.9m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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'. We can see that Al Khaleej Investment P.J.S.C's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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

As we discussed above, we think the significant positive unusual item makes Al Khaleej Investment P.J.S.C's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Al Khaleej Investment P.J.S.C's underlying earnings power is lower than its statutory profit. The good news is that, its earnings per share increased by 29% in the last year. 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. If you'd like to know more about Al Khaleej Investment P.J.S.C as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Al Khaleej Investment P.J.S.C (of which 1 is concerning!) you should know about.

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 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 with significant insider holdings 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.