Zhejiang Daily Digital Culture GroupLtd's (SHSE:600633) Soft Earnings Are Actually Better Than They Appear

Shareholders appeared unconcerned with Zhejiang Daily Digital Culture Group Co.,Ltd's (SHSE:600633) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Zhejiang Daily Digital Culture GroupLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Zhejiang Daily Digital Culture GroupLtd's profit was reduced by CN¥242m, due to unusual items, over the last year. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Zhejiang Daily Digital Culture GroupLtd to produce a higher profit next year, all else being equal.

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 Zhejiang Daily Digital Culture GroupLtd's Profit Performance

Because unusual items detracted from Zhejiang Daily Digital Culture GroupLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Zhejiang Daily Digital Culture GroupLtd's statutory profit actually understates its earnings potential! And it's also good to see that its earnings per share have improved a bit over the last three years. 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Zhejiang Daily Digital Culture GroupLtd has 2 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Daily Digital Culture GroupLtd'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.