Xiamen Voke Mold & Plastic Engineering's (SZSE:301196) Earnings Offer More Than Meets The Eye

Shareholders appeared to be happy with Xiamen Voke Mold & Plastic Engineering Co., Ltd.'s (SZSE:301196) solid earnings report last week. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

See our latest analysis for Xiamen Voke Mold & Plastic Engineering

How Do Unusual Items Influence Profit?

To properly understand Xiamen Voke Mold & Plastic Engineering's profit results, we need to consider the CN¥26m 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. Assuming those unusual expenses don't come up again, we'd therefore expect Xiamen Voke Mold & Plastic Engineering to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Xiamen Voke Mold & Plastic Engineering.

Our Take On Xiamen Voke Mold & Plastic Engineering's Profit Performance

Because unusual items detracted from Xiamen Voke Mold & Plastic Engineering'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 Xiamen Voke Mold & Plastic Engineering's statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 15% in the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Xiamen Voke Mold & Plastic Engineering and you'll want to know about this.

Today we've zoomed in on a single data point to better understand the nature of Xiamen Voke Mold & Plastic Engineering'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.

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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.