There May Be Underlying Issues With The Quality Of Genting Malaysia Berhad's (KLSE:GENM) Earnings

Despite posting some strong earnings, the market for Genting Malaysia Berhad's (KLSE:GENM) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

Check out our latest analysis for Genting Malaysia Berhad

How Do Unusual Items Influence Profit?

For anyone who wants to understand Genting Malaysia Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from RM165m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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 Genting Malaysia Berhad's Profit Performance

Arguably, Genting Malaysia Berhad's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Genting Malaysia Berhad's statutory profits are better than its underlying earnings power. On the bright side, the company showed enough improvement to book a profit this year, after losing money last year. 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 Genting Malaysia Berhad, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Genting Malaysia Berhad.

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