Shijiazhuang Shangtai Technology's (SZSE:001301) Shareholders Have More To Worry About Than Only Soft Earnings

Despite Shijiazhuang Shangtai Technology Co., Ltd.'s (SZSE:001301) recent earnings report having lackluster headline numbers, the market responded positively. We think that shareholders might be missing some concerning factors that our analysis found.

View our latest analysis for Shijiazhuang Shangtai Technology

The Impact Of Unusual Items On Profit

For anyone who wants to understand Shijiazhuang Shangtai Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥89m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. 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 Shijiazhuang Shangtai Technology's Profit Performance

Arguably, Shijiazhuang Shangtai Technology's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Shijiazhuang Shangtai Technology's true underlying earnings power is actually less than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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 Shijiazhuang Shangtai Technology, you'd also look into what risks it is currently facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Shijiazhuang Shangtai Technology.

Today we've zoomed in on a single data point to better understand the nature of Shijiazhuang Shangtai Technology'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 that insiders are buying.

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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.