Suzhou Gold Mantis Construction Decoration's (SZSE:002081) Soft Earnings Don't Show The Whole Picture

Soft earnings didn't appear to concern Suzhou Gold Mantis Construction Decoration Co., Ltd.'s (SZSE:002081) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for Suzhou Gold Mantis Construction Decoration

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Suzhou Gold Mantis Construction Decoration's profit was reduced by CN¥161m, due to unusual items, over the last year. 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Suzhou Gold Mantis Construction Decoration 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 Suzhou Gold Mantis Construction Decoration's Profit Performance

Because unusual items detracted from Suzhou Gold Mantis Construction Decoration's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Suzhou Gold Mantis Construction Decoration's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. So while earnings quality is important, it's equally important to consider the risks facing Suzhou Gold Mantis Construction Decoration at this point in time. Be aware that Suzhou Gold Mantis Construction Decoration is showing 2 warning signs in our investment analysis and 1 of those is potentially serious...

Today we've zoomed in on a single data point to better understand the nature of Suzhou Gold Mantis Construction Decoration'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. 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.

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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.