We Think You Can Look Beyond Shandong Tengda Fasten Tech's (SZSE:001379) Lackluster Earnings

The market for Shandong Tengda Fasten Tech. Co. Ltd's (SZSE:001379) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

See our latest analysis for Shandong Tengda Fasten Tech

How Do Unusual Items Influence Profit?

To properly understand Shandong Tengda Fasten Tech's profit results, we need to consider the CN¥25m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Shandong Tengda Fasten Tech doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shandong Tengda Fasten Tech.

Our Take On Shandong Tengda Fasten Tech's Profit Performance

Unusual items (expenses) detracted from Shandong Tengda Fasten Tech's earnings over the last year, but we might see an improvement next year. Because of this, we think Shandong Tengda Fasten Tech's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 63% annually, over the last three years. 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. 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. At Simply Wall St, we found 2 warning signs for Shandong Tengda Fasten Tech and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Shandong Tengda Fasten Tech's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.