Weak Statutory Earnings May Not Tell The Whole Story For Shenzhen Urban Transport Planning Center (SZSE:301091)

Despite Shenzhen Urban Transport Planning Center Co., Ltd.'s (SZSE:301091) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Shenzhen Urban Transport Planning Center.

Check out our latest analysis for Shenzhen Urban Transport Planning Center

The Impact Of Unusual Items On Profit

To properly understand Shenzhen Urban Transport Planning Center's profit results, we need to consider the CN¥23m gain attributed to 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Shenzhen Urban Transport Planning Center 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 Shenzhen Urban Transport Planning Center's Profit Performance

Arguably, Shenzhen Urban Transport Planning Center's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shenzhen Urban Transport Planning Center's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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. So while earnings quality is important, it's equally important to consider the risks facing Shenzhen Urban Transport Planning Center at this point in time. At Simply Wall St, we found 1 warning sign for Shenzhen Urban Transport Planning Center and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Shenzhen Urban Transport Planning Center's profit. But there are plenty of other ways to inform your opinion of a company. 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. 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.