When companies post strong earnings, the stock generally performs well, just like mDR Limited's (SGX:Y3D) stock has recently. Our analysis found some more factors that we think are good for shareholders.

Check out our latest analysis for mDR

The Impact Of Unusual Items On Profit

For anyone who wants to understand mDR's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by S$11m due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. mDR took a rather significant hit from unusual items in the year to December 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

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

Our Take On mDR's Profit Performance

As we mentioned previously, the mDR's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that mDR's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money 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 mDR at this point in time. At Simply Wall St, we found 4 warning signs for mDR and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of mDR'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 with high insider ownership.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.