Some Investors May Be Willing To Look Past PPB Group Berhad's (KLSE:PPB) Soft Earnings

Soft earnings didn't appear to concern PPB Group Berhad's (KLSE:PPB) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for PPB Group Berhad

How Do Unusual Items Influence Profit?

Importantly, our data indicates that PPB Group Berhad's profit was reduced by RM53m, due to unusual items, over the last year. 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 PPB Group 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 PPB Group Berhad's Profit Performance

Unusual items (expenses) detracted from PPB Group Berhad's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that PPB Group Berhad's statutory profit actually understates its earnings potential! And the EPS is up 5.9% annually, 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 while earnings quality is important, it's equally important to consider the risks facing PPB Group Berhad at this point in time. Every company has risks, and we've spotted 2 warning signs for PPB Group Berhad you should know about.

Today we've zoomed in on a single data point to better understand the nature of PPB Group 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. 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.