Cosonic Intelligent Technologies' (SZSE:300793) Anemic Earnings Might Be Worse Than You Think

Last week's earnings announcement from Cosonic Intelligent Technologies Co., Ltd. (SZSE:300793) was disappointing to investors, with a sluggish profit figure. We did some analysis, and found that there are some reasons to be cautious about the headline numbers.

Check out our latest analysis for Cosonic Intelligent Technologies

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Cosonic Intelligent Technologies' profit received a boost of CN¥51m in unusual items, over the last year. 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. And, after all, that's exactly what the accounting terminology implies. Cosonic Intelligent Technologies had a rather significant contribution from unusual items relative to its profit to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Cosonic Intelligent Technologies.

Our Take On Cosonic Intelligent Technologies' Profit Performance

As previously mentioned, Cosonic Intelligent Technologies' large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Cosonic Intelligent Technologies' underlying earnings power is lower than its statutory profit. 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. So while earnings quality is important, it's equally important to consider the risks facing Cosonic Intelligent Technologies at this point in time. While conducting our analysis, we found that Cosonic Intelligent Technologies has 5 warning signs and it would be unwise to ignore them.

Today we've zoomed in on a single data point to better understand the nature of Cosonic Intelligent Technologies' 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. 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.