Signatureglobal (India) (NSE:SIGNATURE) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Despite announcing strong earnings, Signatureglobal (India) Limited's (NSE:SIGNATURE) stock was sluggish. We did some digging and found some worrying underlying problems.

Check out our latest analysis for Signatureglobal (India)

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Signatureglobal (India)'s profit received a boost of ₹18m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Signatureglobal (India) 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 Signatureglobal (India)'s Profit Performance

Arguably, Signatureglobal (India)'s statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Signatureglobal (India)'s true underlying earnings power is actually less than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. If you'd like to know more about Signatureglobal (India) as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Signatureglobal (India) you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Signatureglobal (India)'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. 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.