Ideal Capital Berhad's (KLSE:IDEAL) Earnings Seem To Be Promising

Ideal Capital Berhad's (KLSE:IDEAL) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

View our latest analysis for Ideal Capital Berhad

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ideal Capital Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM44m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Ideal Capital 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 Ideal Capital Berhad.

Our Take On Ideal Capital Berhad's Profit Performance

Because unusual items detracted from Ideal Capital Berhad's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Ideal Capital Berhad's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 45% 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Be aware that Ideal Capital Berhad is showing 3 warning signs in our investment analysis and 2 of those are concerning...

This note has only looked at a single factor that sheds light on the nature of Ideal Capital Berhad's profit. But there are plenty of other ways to inform your opinion of a company. 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 with significant insider holdings to be useful.

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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.