Jaycorp Berhad's (KLSE:JAYCORP) Earnings Are Weaker Than They Seem

Despite posting some strong earnings, the market for Jaycorp Berhad's (KLSE:JAYCORP) stock hasn't moved much. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

See our latest analysis for Jaycorp Berhad

The Impact Of Unusual Items On Profit

To properly understand Jaycorp Berhad's profit results, we need to consider the RM4.8m gain attributed to 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'. 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 Jaycorp Berhad's Profit Performance

Arguably, Jaycorp Berhad's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Jaycorp Berhad's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 59% per annum growth in EPS for the last three. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Jaycorp Berhad, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Jaycorp Berhad (1 is a bit concerning) you should be familiar with.

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