We Think HSS Engineers Berhad's (KLSE:HSSEB) Robust Earnings Are Conservative

HSS Engineers Berhad (KLSE:HSSEB) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

View our latest analysis for HSS Engineers Berhad

The Impact Of Unusual Items On Profit

Importantly, our data indicates that HSS Engineers Berhad's profit was reduced by RM6.8m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If HSS Engineers Berhad doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 HSS Engineers Berhad's Profit Performance

Unusual items (expenses) detracted from HSS Engineers Berhad's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that HSS Engineers Berhad's statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that HSS Engineers Berhad has 2 warning signs and it would be unwise to ignore them.

This note has only looked at a single factor that sheds light on the nature of HSS Engineers 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. 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. 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.