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The stock price didn't jump after Sing Holdings Limited (SGX:5IC) posted decent earnings last week. Our analysis showed that there are some concerning factors in the earnings that investors may be cautious of.
How Do Unusual Items Influence Profit?
To properly understand Sing Holdings' profit results, we need to consider the S$2.4m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Sing Holdings' positive unusual items were quite significant relative to its profit in the year to December 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sing Holdings .
Our Take On Sing Holdings' Profit Performance
As we discussed above, we think the significant positive unusual item makes Sing Holdings' earnings a poor guide to its underlying profitability. For this reason, we think that Sing Holdings' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The good news is that, its earnings per share increased by 23% in 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. If you want to do dive deeper into Sing Holdings, you'd also look into what risks it is currently facing. For instance, we've identified 5 warning signs for Sing Holdings (2 are a bit unpleasant) you should be familiar with.
This note has only looked at a single factor that sheds light on the nature of Sing Holdings' 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. 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 with significant insider holdings 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.