IRIS Corporation Berhad's (KLSE:IRIS) Earnings Seem To Be Promising

Shareholders appeared to be happy with IRIS Corporation Berhad's (KLSE:IRIS) solid earnings report last week. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

View our latest analysis for IRIS Corporation Berhad

How Do Unusual Items Influence Profit?

For anyone who wants to understand IRIS Corporation Berhad's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by RM10m due to unusual items. 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. If IRIS Corporation Berhad doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of IRIS Corporation Berhad.

Our Take On IRIS Corporation Berhad's Profit Performance

Unusual items (expenses) detracted from IRIS Corporation Berhad's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that IRIS Corporation Berhad's statutory profit actually understates its earnings potential! And the EPS is up 20% over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 2 warning signs for IRIS Corporation Berhad you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of IRIS Corporation Berhad's profit. But there are plenty of other ways to inform your opinion of a company. 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.

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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.