Despite announcing strong earnings, Ardmore Shipping Corporation's (NYSE:ASC) stock was sluggish. We did some digging and found some worrying underlying problems.

See our latest analysis for Ardmore Shipping

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ardmore Shipping's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$14m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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. 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).

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 Ardmore Shipping's Profit Performance

Arguably, Ardmore Shipping's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Ardmore Shipping's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 12% in 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 want to do dive deeper into Ardmore Shipping, you'd also look into what risks it is currently facing. To help with this, we've discovered 2 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Ardmore Shipping.

Today we've zoomed in on a single data point to better understand the nature of Ardmore Shipping's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.