Solid Earnings May Not Tell The Whole Story For Shenzhen Capol International & Associatesco.Ltd (SZSE:002949)

The recent earnings posted by Shenzhen Capol International & Associatesco.,Ltd (SZSE:002949) were solid, but the stock didn't move as much as we expected. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for Shenzhen Capol International & Associatesco.Ltd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Shenzhen Capol International & Associatesco.Ltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥17m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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 Shenzhen Capol International & Associatesco.Ltd's Profit Performance

Arguably, Shenzhen Capol International & Associatesco.Ltd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Shenzhen Capol International & Associatesco.Ltd's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 26% in the last year. 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. If you'd like to know more about Shenzhen Capol International & Associatesco.Ltd as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Shenzhen Capol International & Associatesco.Ltd.

This note has only looked at a single factor that sheds light on the nature of Shenzhen Capol International & Associatesco.Ltd'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 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.