Zhejiang Kaier New MaterialsLtd's (SZSE:300234) Earnings Offer More Than Meets The Eye

Zhejiang Kaier New Materials Co.,Ltd. (SZSE:300234) announced a healthy earnings result recently, and the market rewarded it with a strong uplift in the stock price. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.

View our latest analysis for Zhejiang Kaier New MaterialsLtd

The Impact Of Unusual Items On Profit

To properly understand Zhejiang Kaier New MaterialsLtd's profit results, we need to consider the CN¥9.1m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Zhejiang Kaier New MaterialsLtd 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 Zhejiang Kaier New MaterialsLtd.

Our Take On Zhejiang Kaier New MaterialsLtd's Profit Performance

Because unusual items detracted from Zhejiang Kaier New MaterialsLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Zhejiang Kaier New MaterialsLtd's earnings potential is at least as good as it seems, and maybe even better! 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 Zhejiang Kaier New MaterialsLtd as a business, it's important to be aware of any risks it's facing. For example - Zhejiang Kaier New MaterialsLtd has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Kaier New MaterialsLtd'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.