Concerns Surrounding China Testing & Certification International GroupLtd's (SHSE:603060) Performance

The stock price didn't jump after China Testing & Certification International Group Co.,Ltd. (SHSE:603060) posted decent earnings last week. We did some digging and believe investors may be worried about some underlying factors in the report.

See our latest analysis for China Testing & Certification International GroupLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand China Testing & Certification International GroupLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥51m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 China Testing & Certification International GroupLtd's Profit Performance

Arguably, China Testing & Certification International GroupLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that China Testing & Certification International GroupLtd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased 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. If you'd like to know more about China Testing & Certification International GroupLtd as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for China Testing & Certification International GroupLtd (1 shouldn't be ignored) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of China Testing & Certification International GroupLtd'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. 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.