Shareholders Will Be Pleased With The Quality of Bumi Armada Berhad's (KLSE:ARMADA) Earnings

Bumi Armada Berhad (KLSE:ARMADA) recently posted some strong earnings, and the market responded positively. We have done some analysis, and we found several positive factors beyond the profit numbers.

View our latest analysis for Bumi Armada Berhad

How Do Unusual Items Influence Profit?

For anyone who wants to understand Bumi Armada Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM332m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Bumi Armada Berhad to produce a higher profit next year, all else being equal.

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 Bumi Armada Berhad's Profit Performance

Unusual items (expenses) detracted from Bumi Armada Berhad's earnings over the last year, but we might see an improvement next year. Because of this, we think Bumi Armada Berhad's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the 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. So while earnings quality is important, it's equally important to consider the risks facing Bumi Armada Berhad at this point in time. Case in point: We've spotted 3 warning signs for Bumi Armada Berhad you should be mindful of and 1 of these bad boys shouldn't be ignored.

This note has only looked at a single factor that sheds light on the nature of Bumi Armada 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 that insiders are buying.

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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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