We're Not Counting On AME Elite Consortium Berhad (KLSE:AME) To Sustain Its Statutory Profitability

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. Today we'll focus on whether this year's statutory profits are a good guide to understanding AME Elite Consortium Berhad (KLSE:AME).

While AME Elite Consortium Berhad was able to generate revenue of RM379.8m in the last twelve months, we think its profit result of RM46.7m was more important. The chart below shows how it has grown revenue over the last three years, but that profit has declined.

View our latest analysis for AME Elite Consortium Berhad

Of course, it is only sensible to look beyond the statutory profits and question how well those numbers represent the sustainable earnings power of the business. This article will discuss how unusual items have impacted AME Elite Consortium Berhad's most recent profit results. 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?

For anyone who wants to understand AME Elite Consortium Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from RM13m worth of 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'. If AME Elite Consortium Berhad doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Our Take On AME Elite Consortium Berhad's Profit Performance

Arguably, AME Elite Consortium Berhad's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that AME Elite Consortium Berhad's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for AME Elite Consortium Berhad and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of AME Elite Consortium Berhad'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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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