Stock Analysis

Weak Statutory Earnings May Not Tell The Whole Story For Kerjaya Prospek Group Berhad (KLSE:KERJAYA)

KLSE:KERJAYA
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A lackluster earnings announcement from Kerjaya Prospek Group Berhad (KLSE:KERJAYA) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for Kerjaya Prospek Group Berhad

earnings-and-revenue-history
KLSE:KERJAYA Earnings and Revenue History May 5th 2021

The Impact Of Unusual Items On Profit

For anyone who wants to understand Kerjaya Prospek Group Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from RM18m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. 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).

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 Kerjaya Prospek Group Berhad's Profit Performance

Arguably, Kerjaya Prospek Group Berhad's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Kerjaya Prospek Group Berhad's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Kerjaya Prospek Group Berhad, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Kerjaya Prospek Group Berhad has 2 warning signs and it would be unwise to ignore these.

This note has only looked at a single factor that sheds light on the nature of Kerjaya Prospek Group 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. 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.

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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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