Are Science Group's (LON:SAG) Earnings Of Questionable Quality?

Science Group plc's ( LON:SAG ) robust earnings report led to only minor movements in the market for the stock. Our analysis suggests that shareholders have noticed something in the numbers.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Science Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from UK£24m worth of unusual items. This arose from a significant return on an investment in the shares of another company, Ricardo.

While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often  not repeated the next year. And, after all, that's exactly what the accounting terminology implies. We can see that Science Group's positive unusual items were quite significant relative to its profit in the year to June 2025. However, if we take a look at pre-tax Earnings excluding unusual items, we can see it has increased over 70% year-ony-year, so the impact of unusual items doesn't have us concerned in any way.

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 Science Group's Profit Performance

As we discussed above, we think the significant positive unusual item doesn't interfere with Science Group's strong underlying profitability. Some more good news is that its EPS growth over the last three years has been very impressive. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Be aware that Science Group is showing 2 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable...

This note has only looked at a single factor that sheds light on the nature of Science Group's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.

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.