Dare Power Dekor HomeLtd's (SZSE:000910) Anemic Earnings Might Be Worse Than You Think

Dare Power Dekor Home Co.,Ltd.'s (SZSE:000910) recent weak earnings report didn't cause a big stock movement. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

See our latest analysis for Dare Power Dekor HomeLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Dare Power Dekor HomeLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥38m worth of unusual items. 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 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. And, after all, that's exactly what the accounting terminology implies. 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 Dare Power Dekor HomeLtd's Profit Performance

Arguably, Dare Power Dekor HomeLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Dare Power Dekor HomeLtd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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 Dare Power Dekor HomeLtd 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 Dare Power Dekor HomeLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Dare Power Dekor HomeLtd'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 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.