We Like Harvest Miracle Capital Berhad's (KLSE:HM) Earnings For More Than Just Statutory Profit

The market seemed underwhelmed by last week's earnings announcement from Harvest Miracle Capital Berhad (KLSE:HM) despite the healthy numbers. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

View our latest analysis for Harvest Miracle Capital Berhad

How Do Unusual Items Influence Profit?

For anyone who wants to understand Harvest Miracle Capital Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM6.7m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. 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 Harvest Miracle 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 Harvest Miracle Capital Berhad.

Our Take On Harvest Miracle Capital Berhad's Profit Performance

Unusual items (expenses) detracted from Harvest Miracle Capital Berhad's earnings over the last year, but we might see an improvement next year. Because of this, we think Harvest Miracle Capital Berhad's earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Harvest Miracle Capital Berhad.

This note has only looked at a single factor that sheds light on the nature of Harvest Miracle Capital 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.