Fujian SBS Zipper Science&Technology's (SZSE:002098) Strong Earnings Are Of Good Quality

Fujian SBS Zipper Science&Technology Co., Ltd (SZSE:002098) just reported healthy earnings but the stock price didn't move much. Investors are probably missing some underlying factors which are encouraging for the future of the company.

Check out our latest analysis for Fujian SBS Zipper Science&Technology

The Impact Of Unusual Items On Profit

For anyone who wants to understand Fujian SBS Zipper Science&Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥33m due 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Fujian SBS Zipper Science&Technology doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Fujian SBS Zipper Science&Technology.

Our Take On Fujian SBS Zipper Science&Technology's Profit Performance

Unusual items (expenses) detracted from Fujian SBS Zipper Science&Technology's earnings over the last year, but we might see an improvement next year. Because of this, we think Fujian SBS Zipper Science&Technology's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. You can see our latest analysis on Fujian SBS Zipper Science&Technology's balance sheet health here.

This note has only looked at a single factor that sheds light on the nature of Fujian SBS Zipper Science&Technology'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. 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.