Some May Be Optimistic About Saudi Arabia Refineries' (TADAWUL:2030) Earnings

Shareholders appeared unconcerned with Saudi Arabia Refineries Company's (TADAWUL:2030) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for Saudi Arabia Refineries

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Saudi Arabia Refineries' profit was reduced by ر.س1.8m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Saudi Arabia Refineries 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 Saudi Arabia Refineries.

Our Take On Saudi Arabia Refineries' Profit Performance

Unusual items (expenses) detracted from Saudi Arabia Refineries' earnings over the last year, but we might see an improvement next year. Because of this, we think Saudi Arabia Refineries' earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To that end, you should learn about the 3 warning signs we've spotted with Saudi Arabia Refineries (including 1 which is a bit concerning).

This note has only looked at a single factor that sheds light on the nature of Saudi Arabia Refineries' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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.