We Think That There Are Issues Underlying J. Smart (Contractors)'s (LON:SMJ) Earnings

J. Smart & Co. (Contractors) PLC's (LON:SMJ) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand J. Smart (Contractors)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from UK£6.0m 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 analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that J. Smart (Contractors)'s positive unusual items were quite significant relative to its profit in the year to July 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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Our Take On J. Smart (Contractors)'s Profit Performance

As previously mentioned, J. Smart (Contractors)'s large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that J. Smart (Contractors)'s statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the last year. 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. If you'd like to know more about J. Smart (Contractors) as a business, it's important to be aware of any risks it's facing. For instance, we've identified 4 warning signs for J. Smart (Contractors) (1 doesn't sit too well with us) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of J. Smart (Contractors)'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. 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.

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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.