GuocoLand (Malaysia) Berhad's (KLSE:GUOCO) Sluggish Earnings Might Be Just The Beginning Of Its Problems

GuocoLand (Malaysia) Berhad's (KLSE:GUOCO) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

Check out our latest analysis for GuocoLand (Malaysia) Berhad

How Do Unusual Items Influence Profit?

Importantly, our data indicates that GuocoLand (Malaysia) Berhad's profit received a boost of RM5.1m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If GuocoLand (Malaysia) Berhad doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of GuocoLand (Malaysia) Berhad.

Our Take On GuocoLand (Malaysia) Berhad's Profit Performance

We'd posit that GuocoLand (Malaysia) Berhad's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that GuocoLand (Malaysia) Berhad's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 1 warning sign for GuocoLand (Malaysia) Berhad you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of GuocoLand (Malaysia) Berhad'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.