Censof Holdings Berhad's (KLSE:CENSOF) Earnings Are Of Questionable Quality

Despite posting some strong earnings, the market for Censof Holdings Berhad's (KLSE:CENSOF) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.

Check out our latest analysis for Censof Holdings Berhad

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Censof Holdings Berhad's profit received a boost of RM950k in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Censof Holdings Berhad doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Censof Holdings Berhad.

Our Take On Censof Holdings Berhad's Profit Performance

Arguably, Censof Holdings Berhad's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Censof Holdings Berhad's statutory profits are better than its underlying earnings power. The good news is that, its earnings per share increased by 19% in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Censof Holdings Berhad as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Censof Holdings Berhad, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Censof Holdings Berhad's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.