SF Urban Properties' (VTX:SFPN) Shareholders May Want To Dig Deeper Than Statutory Profit

The recent earnings posted by SF Urban Properties AG (VTX:SFPN) were solid, but the stock didn't move as much as we expected. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

See our latest analysis for SF Urban Properties

The Impact Of Unusual Items On Profit

For anyone who wants to understand SF Urban Properties' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CHF4.6m worth of unusual items. 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 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'. If SF Urban Properties doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On SF Urban Properties' Profit Performance

Arguably, SF Urban Properties' statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that SF Urban Properties' statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 68% EPS growth in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing SF Urban Properties at this point in time. For example, SF Urban Properties has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about.

This note has only looked at a single factor that sheds light on the nature of SF Urban Properties' 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. 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.