Why Easy Lease Motor Cycle Rental P.S.C's (ADX:EASYLEASE) Shaky Earnings Are Just The Beginning Of Its Problems

Easy Lease Motor Cycle Rental P.S.C.'s (ADX:EASYLEASE) stock showed strength, with investors undeterred by its weak earnings report. While shareholders may be willing to overlook soft profit numbers, we believe that they should also be taking into account some other factors which may be cause for concern.

View our latest analysis for Easy Lease Motor Cycle Rental P.S.C

How Do Unusual Items Influence Profit?

For anyone who wants to understand Easy Lease Motor Cycle Rental P.S.C's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from د.إ6.0m 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 Easy Lease Motor Cycle Rental P.S.C.

Our Take On Easy Lease Motor Cycle Rental P.S.C's Profit Performance

Arguably, Easy Lease Motor Cycle Rental P.S.C's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Easy Lease Motor Cycle Rental P.S.C's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 26% per annum growth in EPS for the last three. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Easy Lease Motor Cycle Rental P.S.C and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Easy Lease Motor Cycle Rental P.S.C'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.