Some Investors May Be Willing To Look Past Jardine Matheson Holdings' (SGX:J36) Soft Earnings

Shareholders appeared unconcerned with Jardine Matheson Holdings Limited's (SGX:J36) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Check out our latest analysis for Jardine Matheson Holdings

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Jardine Matheson Holdings' profit was reduced by US$1.8b, 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, after all, that's exactly what the accounting terminology implies. Jardine Matheson Holdings took a rather significant hit from unusual items in the year to June 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker 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 Jardine Matheson Holdings' Profit Performance

As we discussed above, we think the significant unusual expense will make Jardine Matheson Holdings' statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Jardine Matheson Holdings' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Jardine Matheson Holdings at this point in time. While conducting our analysis, we found that Jardine Matheson Holdings has 4 warning signs and it would be unwise to ignore them.

Today we've zoomed in on a single data point to better understand the nature of Jardine Matheson Holdings' 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 with significant insider holdings 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.