Some May Be Optimistic About Frasers Property's (SGX:TQ5) Earnings

Soft earnings didn't appear to concern Frasers Property Limited's (SGX:TQ5) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for Frasers Property

How Do Unusual Items Influence Profit?

For anyone who wants to understand Frasers Property's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by S$462m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. In the twelve months to September 2023, Frasers Property had a big unusual items expense. 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 Frasers Property's Profit Performance

As we discussed above, we think the significant unusual expense will make Frasers Property's statutory profit lower than it would otherwise have been. Because of this, we think Frasers Property's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back 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. So while earnings quality is important, it's equally important to consider the risks facing Frasers Property at this point in time. For example, Frasers Property has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Frasers Property's 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.