Cecep Guozhen Environmental Protection Technologyltd's (SZSE:300388) Anemic Earnings Might Be Worse Than You Think

A lackluster earnings announcement from Cecep Guozhen Environmental Protection Technology Co.,ltd. (SZSE:300388) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

Check out our latest analysis for Cecep Guozhen Environmental Protection Technologyltd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Cecep Guozhen Environmental Protection Technologyltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥57m worth of unusual items. 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. And that's as you'd expect, given these boosts are described as 'unusual'. If Cecep Guozhen Environmental Protection Technologyltd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Cecep Guozhen Environmental Protection Technologyltd's Profit Performance

We'd posit that Cecep Guozhen Environmental Protection Technologyltd's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Cecep Guozhen Environmental Protection Technologyltd's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 19% over the last three years. 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 want to do dive deeper into Cecep Guozhen Environmental Protection Technologyltd, you'd also look into what risks it is currently facing. For example, Cecep Guozhen Environmental Protection Technologyltd has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

This note has only looked at a single factor that sheds light on the nature of Cecep Guozhen Environmental Protection Technologyltd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 that insiders are buying 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.