Kumpulan Perangsang Selangor Berhad's (KLSE:KPS) Weak Earnings May Only Reveal A Part Of The Whole Picture

A lackluster earnings announcement from Kumpulan Perangsang Selangor Berhad (KLSE:KPS) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

Check out our latest analysis for Kumpulan Perangsang Selangor Berhad

How Do Unusual Items Influence Profit?

To properly understand Kumpulan Perangsang Selangor Berhad's profit results, we need to consider the RM21m gain attributed to 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Kumpulan Perangsang Selangor Berhad had a rather significant contribution from unusual items relative to its profit to March 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Kumpulan Perangsang Selangor Berhad's Profit Performance

As previously mentioned, Kumpulan Perangsang Selangor Berhad's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Kumpulan Perangsang Selangor Berhad's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. Nonetheless, it's still worth noting that its earnings per share have grown at 14% over the last three years. 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 Kumpulan Perangsang Selangor Berhad as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 4 warning signs for Kumpulan Perangsang Selangor Berhad (of which 1 shouldn't be ignored!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Kumpulan Perangsang Selangor Berhad's profit. But there are plenty of other ways to inform your opinion of a company. 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 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.