There May Be Some Bright Spots In Qingdao Topscomm Communication's (SHSE:603421) Earnings

Qingdao Topscomm Communication INC.'s (SHSE:603421) stock was strong despite it releasing a soft earnings report last week. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for Qingdao Topscomm Communication

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Qingdao Topscomm Communication's profit was reduced by CN¥55m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Qingdao Topscomm Communication to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Qingdao Topscomm Communication.

Our Take On Qingdao Topscomm Communication's Profit Performance

Unusual items (expenses) detracted from Qingdao Topscomm Communication's earnings over the last year, but we might see an improvement next year. Because of this, we think Qingdao Topscomm Communication's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. If you'd like to know more about Qingdao Topscomm Communication as a business, it's important to be aware of any risks it's facing. For instance, we've identified 5 warning signs for Qingdao Topscomm Communication (1 is a bit unpleasant) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Qingdao Topscomm Communication's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.