Stock Analysis

Shareholders Will Be Pleased With The Quality of Negri Sembilan Oil Palms Berhad's (KLSE:NSOP) Earnings

KLSE:NSOP
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Even though Negri Sembilan Oil Palms Berhad's (KLSE:NSOP) recent earnings release was robust, the market didn't seem to notice. We think that investors have missed some encouraging factors underlying the profit figures.

See our latest analysis for Negri Sembilan Oil Palms Berhad

earnings-and-revenue-history
KLSE:NSOP Earnings and Revenue History June 29th 2021

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Negri Sembilan Oil Palms Berhad's profit was reduced by RM2.2m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 expenses don't come up again, we'd therefore expect Negri Sembilan Oil Palms 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 Negri Sembilan Oil Palms Berhad.

Our Take On Negri Sembilan Oil Palms Berhad's Profit Performance

Because unusual items detracted from Negri Sembilan Oil Palms Berhad's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Negri Sembilan Oil Palms Berhad's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, Negri Sembilan Oil Palms Berhad has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Negri Sembilan Oil Palms Berhad's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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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