The Strong Earnings Posted By Federal International (2000) (SGX:BDU) Are A Good Indication Of The Strength Of The Business

Federal International (2000) Ltd (SGX:BDU) just reported healthy earnings but the stock price didn't move much. Investors are probably missing some underlying factors which are encouraging for the future of the company.

Check out our latest analysis for Federal International (2000)

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Federal International (2000)'s profit was reduced by S$3.1m, due to unusual items, over the last year. 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. Federal International (2000) took a rather significant hit from unusual items in the year to December 2022. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Federal International (2000).

Our Take On Federal International (2000)'s Profit Performance

As we mentioned previously, the Federal International (2000)'s profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Federal International (2000)'s statutory profit actually understates its earnings potential! Furthermore, it has done a great job growing EPS over the last year. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Federal International (2000).

This note has only looked at a single factor that sheds light on the nature of Federal International (2000)'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. 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.