Henan Tong-Da Cable's (SZSE:002560) Soft Earnings Are Actually Better Than They Appear

Shareholders appeared unconcerned with Henan Tong-Da Cable Co., Ltd.'s (SZSE:002560) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for Henan Tong-Da Cable

How Do Unusual Items Influence Profit?

For anyone who wants to understand Henan Tong-Da Cable's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥102m due 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 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 Henan Tong-Da Cable 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 Henan Tong-Da Cable's Profit Performance

Unusual items (expenses) detracted from Henan Tong-Da Cable's earnings over the last year, but we might see an improvement next year. Because of this, we think Henan Tong-Da Cable's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into Henan Tong-Da Cable, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Henan Tong-Da Cable and you'll want to know about these.

This note has only looked at a single factor that sheds light on the nature of Henan Tong-Da Cable'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 that insiders are buying.

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.