A lackluster earnings announcement from Singapore Land Group Limited (SGX:U06) has kept its share price low last week. We believe investors are concerned about some weakness underlying earnings.
Check out our latest analysis for Singapore Land Group
How do unusual items affect profits?
For anyone looking to understand Singapore Land Group’s profit beyond the statutory numbers, it’s important to know that statutory profit over the last twelve months was covered by S$22m worth of unusual items. While it’s always nice to have higher profit, sometimes a large contribution from unusual items dampens our enthusiasm. When we analyzed the vast majority of listed companies globally, we found that significant unusual items are often not repeated. This is hardly surprising, given the name. Therefore, assuming these unusual items do not recur in the current year, we would expect next year’s profit to be weaker (in the absence of business growth, that is).
Note: We always recommend investors check balance sheet strength. Click here to access our balance sheet analysis of Singapore Land Group.
Our assessment of the earnings development of the Singapore Land Group
It could be argued that Singapore Land Group’s statutory profits have been distorted by unusual items that boosted earnings. For this reason, we believe Singapore Land Group’s statutory profits could be better than its underlying earnings power. Unfortunately, its earnings per share have been declining over the last twelve months. Ultimately, it’s important to consider more than just the factors mentioned above if you want to properly understand the company. While the quality of earnings is important, it’s equally important to consider the risks that Singapore Land Group is currently facing. For example, we’ve noted 1 warning sign that you should check out to get a better idea of the Singapore Land Group.
Today we’ve focused on a single data point to better understand the nature of Singapore Land Group’s earnings. But there are many other ways to form an opinion about a company. For example, many people consider a high return on equity to indicate a favorable business situation, while others like to “follow the money” and look for stocks that insiders are buying. Although this may require a little research, you may find this free Collection of companies with high return on equity or this list of stocks with significant insider holdings may prove useful.
Do you have feedback on this article? Are you concerned about the content? Contact us directly from us. Alternatively, send an email to editorial-team (at) simplywallst.com.
This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
