Solid Earnings Reflect Malayan Flour Mills Berhad's (KLSE:MFLOUR) Strength As A Business

Even though Malayan Flour Mills Berhad's (KLSE:MFLOUR) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

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The Impact Of Unusual Items On Profit

To properly understand Malayan Flour Mills Berhad's profit results, we need to consider the RM42m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Malayan Flour Mills Berhad to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Malayan Flour Mills Berhad.

Our Take On Malayan Flour Mills Berhad's Profit Performance

Unusual items (expenses) detracted from Malayan Flour Mills Berhad's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Malayan Flour Mills Berhad's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 3 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in Malayan Flour Mills Berhad.

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