Al-Saif Stores for Development & Investment's (TADAWUL:4192) Problems Go Beyond Weak Profit

Despite Al-Saif Stores for Development & Investment Company's (TADAWUL:4192) recent earnings report having lackluster headline numbers, the market responded positively. We think that shareholders might be missing some concerning factors that our analysis found.

View our latest analysis for Al-Saif Stores for Development & Investment

The Impact Of Unusual Items On Profit

For anyone who wants to understand Al-Saif Stores for Development & Investment's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ر.س15m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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 that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Al-Saif Stores for Development & Investment.

Our Take On Al-Saif Stores for Development & Investment's Profit Performance

We'd posit that Al-Saif Stores for Development & Investment's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Al-Saif Stores for Development & Investment's statutory profits are better than its underlying earnings power. Sadly, its EPS was down 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Al-Saif Stores for Development & Investment you should be mindful of and 1 of these is a bit concerning.

This note has only looked at a single factor that sheds light on the nature of Al-Saif Stores for Development & Investment'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.