Infore Environment Technology Group's (SZSE:000967) Earnings Seem To Be Promising

The market seemed underwhelmed by last week's earnings announcement from Infore Environment Technology Group Co., Ltd. (SZSE:000967) despite the healthy numbers. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

See our latest analysis for Infore Environment Technology Group

How Do Unusual Items Influence Profit?

For anyone who wants to understand Infore Environment Technology Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥121m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Infore Environment Technology Group to produce a higher profit next year, all else being equal.

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 Infore Environment Technology Group's Profit Performance

Because unusual items detracted from Infore Environment Technology Group's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Infore Environment Technology Group's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share increased by 8.5% 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 1 warning sign with Infore Environment Technology Group, and understanding this should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Infore Environment Technology Group's profit. But there are plenty of other ways to inform your opinion of a company. 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. 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.