The Strong Earnings Posted By Circle (BIT:CIRC) Are A Good Indication Of The Strength Of The Business

Circle S.p.A. (BIT:CIRC) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, our analysis suggests that shareholders may be missing some factors that indicate the earnings result was not as good as it looked.

View our latest analysis for Circle

Our Take On Circle's Profit Performance

Because of this, we think that it may be that Circle's statutory profits are better than its underlying earnings power. So while earnings quality is important, it's equally important to consider the risks facing Circle at this point in time. At Simply Wall St, we found 2 warning signs for Circle and we think they deserve your attention.

Our examination of Circle has focussed on certain factors that can make its earnings look better than they are. 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 that insiders are buying 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.