Does Deyaar Development PJSC's (DFM:DEYAAR) Statutory Profit Adequately Reflect Its Underlying Profit?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. This article will consider whether Deyaar Development PJSC's (DFM:DEYAAR) statutory profits are a good guide to its underlying earnings.

While Deyaar Development PJSC was able to generate revenue of د.إ408.5m in the last twelve months, we think its profit result of د.إ31.5m was more important. In the last few years both its revenue and its profit have fallen, as you can see in the chart below.

View our latest analysis for Deyaar Development PJSC

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Deyaar Development PJSC's statutory earnings. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

How Do Unusual Items Influence Profit?

To properly understand Deyaar Development PJSC's profit results, we need to consider the د.إ4.5m expense attributed 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. Assuming those unusual expenses don't come up again, we'd therefore expect Deyaar Development PJSC to produce a higher profit next year, all else being equal.

Our Take On Deyaar Development PJSC's Profit Performance

Unusual items (expenses) detracted from Deyaar Development PJSC's earnings over the last year, but we might see an improvement next year. Because of this, we think Deyaar Development PJSC's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 1 warning sign for Deyaar Development PJSC you should know about.

Today we've zoomed in on a single data point to better understand the nature of Deyaar Development PJSC'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. 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. 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.
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