Shanghai Prisemi ElectronicsLtd (SHSE:688230) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Investors were disappointed with Shanghai Prisemi Electronics Co.,Ltd.'s (SHSE:688230) earnings, despite the strong profit numbers. We did some digging and found some worrying underlying problems.

See our latest analysis for Shanghai Prisemi ElectronicsLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Shanghai Prisemi ElectronicsLtd's profit received a boost of CN¥6.3m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Shanghai Prisemi ElectronicsLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shanghai Prisemi ElectronicsLtd.

Our Take On Shanghai Prisemi ElectronicsLtd's Profit Performance

Arguably, Shanghai Prisemi ElectronicsLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shanghai Prisemi ElectronicsLtd's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 37% EPS growth in the last year. 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 Shanghai Prisemi ElectronicsLtd as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Shanghai Prisemi ElectronicsLtd has 2 warning signs and it would be unwise to ignore these.

Today we've zoomed in on a single data point to better understand the nature of Shanghai Prisemi ElectronicsLtd'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. 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.