Some Investors May Be Willing To Look Past CapitaLand Investment's (SGX:9CI) Soft Earnings

Soft earnings didn't appear to concern CapitaLand Investment Limited's (SGX:9CI) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for CapitaLand Investment

How Do Unusual Items Influence Profit?

Importantly, our data indicates that CapitaLand Investment's profit was reduced by S$186m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. Assuming those unusual expenses don't come up again, we'd therefore expect CapitaLand Investment to produce a higher profit next year, all else being equal.

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 CapitaLand Investment's Profit Performance

Because unusual items detracted from CapitaLand Investment's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that CapitaLand Investment's 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. If you want to do dive deeper into CapitaLand Investment, you'd also look into what risks it is currently facing. For example, CapitaLand Investment has 4 warning signs (and 2 which are potentially serious) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of CapitaLand Investment's 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 that insiders are buying 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.