Al Hassan Ghazi Ibrahim Shaker's (TADAWUL:1214) Earnings Are Of Questionable Quality

Al Hassan Ghazi Ibrahim Shaker Company (TADAWUL:1214) announced strong profits, but the stock was stagnant. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

Check out our latest analysis for Al Hassan Ghazi Ibrahim Shaker

How Do Unusual Items Influence Profit?

For anyone who wants to understand Al Hassan Ghazi Ibrahim Shaker's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ر.س13m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. And, after all, that's exactly what the accounting terminology implies. Al Hassan Ghazi Ibrahim Shaker had a rather significant contribution from unusual items relative to its profit to December 2020. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Al Hassan Ghazi Ibrahim Shaker's Profit Performance

As previously mentioned, Al Hassan Ghazi Ibrahim Shaker's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Al Hassan Ghazi Ibrahim Shaker's underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. Case in point: We've spotted 3 warning signs for Al Hassan Ghazi Ibrahim Shaker you should be mindful of and 1 of these is significant.

Today we've zoomed in on a single data point to better understand the nature of Al Hassan Ghazi Ibrahim Shaker'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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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