Gulf Navigation Holding PJSC's (DFM:GULFNAV) Attractive Earnings Are Not All Good News For Shareholders

Gulf Navigation Holding PJSC's (DFM:GULFNAV) stock rose after it released a robust earnings report. However, we think that shareholders should be aware of some other factors beyond the profit numbers.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Gulf Navigation Holding PJSC's profit received a boost of د.إ13m in unusual items, over the last year. 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. And, after all, that's exactly what the accounting terminology implies. We can see that Gulf Navigation Holding PJSC's positive unusual items were quite significant relative to its profit in the year to June 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Gulf Navigation Holding PJSC.

An Unusual Tax Situation

Just as we noted the unusual items, we must inform you that Gulf Navigation Holding PJSC received a tax benefit which contributed د.إ2.0m to the bottom line. This is of course a bit out of the ordinary, given it is more common for companies to be paying tax than receiving tax benefits! The receipt of a tax benefit is obviously a good thing, on its own. And given that it lost money last year, it seems possible that the benefit is evidence that it now expects to find value in its past tax losses. However, our data indicates that tax benefits can temporarily boost statutory profit in the year it is booked, but subsequently profit may fall back. Assuming the tax benefit is not repeated every year, we could see its profitability drop noticeably, all else being equal.

Our Take On Gulf Navigation Holding PJSC's Profit Performance

In its last report Gulf Navigation Holding PJSC received a tax benefit which might make its profit look better than it really is on a underlying level. Furthermore, it also benefitted from a positive unusual item, which boosted the profit result even higher. For the reasons mentioned above, we think that a perfunctory glance at Gulf Navigation Holding PJSC's statutory profits might make it look better than it really is on an underlying level. If you'd like to know more about Gulf Navigation Holding PJSC as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Gulf Navigation Holding PJSC you should be aware of.

Our examination of Gulf Navigation Holding PJSC has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. 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. 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.