KYM Holdings Bhd's (KLSE:KYM) Anemic Earnings Might Be Worse Than You Think

The subdued market reaction suggests that KYM Holdings Bhd's (KLSE:KYM) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for KYM Holdings Bhd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that KYM Holdings Bhd's profit received a boost of RM134k in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of KYM Holdings Bhd.

Our Take On KYM Holdings Bhd's Profit Performance

Arguably, KYM Holdings Bhd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that KYM Holdings Bhd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that KYM Holdings Bhd has 2 warning signs and it would be unwise to ignore them.

This note has only looked at a single factor that sheds light on the nature of KYM Holdings Bhd'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.