There May Be Some Bright Spots In TCL Zhonghuan Renewable Energy TechnologyLtd's (SZSE:002129) Earnings

TCL Zhonghuan Renewable Energy Technology Co.,Ltd.'s (SZSE:002129) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for TCL Zhonghuan Renewable Energy TechnologyLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that TCL Zhonghuan Renewable Energy TechnologyLtd's profit was reduced by CN¥2.3b, 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. 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. In the twelve months to March 2024, TCL Zhonghuan Renewable Energy TechnologyLtd had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 TCL Zhonghuan Renewable Energy TechnologyLtd's Profit Performance

As we discussed above, we think the significant unusual expense will make TCL Zhonghuan Renewable Energy TechnologyLtd's statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that TCL Zhonghuan Renewable Energy TechnologyLtd's statutory profit actually understates its earnings potential! 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 4 warning signs for TCL Zhonghuan Renewable Energy TechnologyLtd (2 can't be ignored!) and we strongly recommend you look at them before investing.

Today we've zoomed in on a single data point to better understand the nature of TCL Zhonghuan Renewable Energy TechnologyLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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 that insiders are buying.

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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.