Robust Earnings May Not Tell The Whole Story For Raffles Medical Group (SGX:BSL)

Raffles Medical Group Ltd (SGX:BSL) just released a solid earnings report, and the stock displayed some strength. Despite this, our analysis suggests that there are some factors weakening the foundations of those good profit numbers.

Check out our latest analysis for Raffles Medical Group

The Impact Of Unusual Items On Profit

To properly understand Raffles Medical Group's profit results, we need to consider the S$18m gain attributed to 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. 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).

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 Raffles Medical Group's Profit Performance

We'd posit that Raffles Medical Group's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Raffles Medical Group's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 7.9% in 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. If you'd like to know more about Raffles Medical Group as a business, it's important to be aware of any risks it's facing. For example - Raffles Medical Group has 3 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Raffles Medical Group's profit. But there are plenty of other ways to inform your opinion of a company. 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. 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.
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