Investors Shouldn't Be Too Comfortable With Wee Hur Holdings' (SGX:E3B) Earnings

Wee Hur Holdings Ltd. (SGX:E3B) announced strong profits, but the stock was stagnant. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

See our latest analysis for Wee Hur Holdings

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Wee Hur Holdings' profit received a boost of S$20m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. We can see that Wee Hur Holdings' positive unusual items were quite significant relative to its profit in the year to December 2023. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger 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 Wee Hur Holdings.

Our Take On Wee Hur Holdings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Wee Hur Holdings' earnings a poor guide to its underlying profitability. For this reason, we think that Wee Hur Holdings' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. If you want to do dive deeper into Wee Hur Holdings, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for Wee Hur Holdings (1 is a bit concerning) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Wee Hur Holdings' 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.