A lackluster earnings announcement from Singapore Land Group Limited (SGX:U06) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

Check out our latest analysis for Singapore Land Group

How Do Unusual Items Influence Profit?

For anyone who wants to understand Singapore Land Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from S$22m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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

Our Take On Singapore Land Group's Profit Performance

Arguably, Singapore Land Group's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Singapore Land Group's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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 Singapore Land Group at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Singapore Land Group.

Today we've zoomed in on a single data point to better understand the nature of Singapore Land Group's profit. But there are plenty of other ways to inform your opinion of a company. 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.