Panther Securities' (LON:PNS) Anemic Earnings Might Be Worse Than You Think

A lackluster earnings announcement from Panther Securities PLC (LON:PNS) last week didn't sink the stock price. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

View our latest analysis for Panther Securities

How Do Unusual Items Influence Profit?

For anyone who wants to understand Panther Securities' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from UK£5.8m 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 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. Which is hardly surprising, given the name. Panther Securities had a rather significant contribution from unusual items relative to its profit to December 2023. 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 Panther Securities.

Our Take On Panther Securities' Profit Performance

As we discussed above, we think the significant positive unusual item makes Panther Securities' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Panther Securities' underlying earnings power is lower than its statutory profit. But at least holders can take some solace from the 69% per annum growth in EPS for the last three. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To that end, you should learn about the 5 warning signs we've spotted with Panther Securities (including 1 which is significant).

Today we've zoomed in on a single data point to better understand the nature of Panther Securities' 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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.