We Think You Can Look Beyond Azam Jaya Berhad's (KLSE:AZAMJAYA) Lackluster Earnings

The market for Azam Jaya Berhad's (KLSE:AZAMJAYA) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Azam Jaya Berhad

How Do Unusual Items Influence Profit?

For anyone who wants to understand Azam Jaya Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM14m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Azam Jaya Berhad to produce a higher profit next year, all else being equal.

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.

Our Take On Azam Jaya Berhad's Profit Performance

Because unusual items detracted from Azam Jaya Berhad's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Azam Jaya Berhad's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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 Azam Jaya Berhad as a business, it's important to be aware of any risks it's facing. For instance, we've identified 4 warning signs for Azam Jaya Berhad (1 is potentially serious) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of Azam Jaya Berhad's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 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.