Guizhou Taiyong-Changzheng TechnologyLtd's (SZSE:002927) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Guizhou Taiyong-Changzheng Technology Co.,Ltd.'s (SZSE:002927) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Guizhou Taiyong-Changzheng TechnologyLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Guizhou Taiyong-Changzheng TechnologyLtd's profit received a boost of CN¥5.7m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. If Guizhou Taiyong-Changzheng TechnologyLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Guizhou Taiyong-Changzheng TechnologyLtd.

Our Take On Guizhou Taiyong-Changzheng TechnologyLtd's Profit Performance

Arguably, Guizhou Taiyong-Changzheng TechnologyLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Guizhou Taiyong-Changzheng TechnologyLtd's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Guizhou Taiyong-Changzheng TechnologyLtd (of which 1 is concerning!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Guizhou Taiyong-Changzheng TechnologyLtd'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. 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 with significant insider holdings 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.