Anmol India's (NSE:ANMOL) Shareholders Have More To Worry About Than Only Soft Earnings

The market wasn't impressed with the soft earnings from Anmol India Limited (NSE:ANMOL) recently. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

View our latest analysis for Anmol India

The Impact Of Unusual Items On Profit

To properly understand Anmol India's profit results, we need to consider the ₹23m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. 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 Anmol India.

Our Take On Anmol India's Profit Performance

Arguably, Anmol India's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Anmol India'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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 2 warning signs for Anmol India and you'll want to know about these.

This note has only looked at a single factor that sheds light on the nature of Anmol India's 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.