We Think You Can Look Beyond Foshan Blue Rocket ElectronicsLtd's (SZSE:301348) Lackluster Earnings

Soft earnings didn't appear to concern Foshan Blue Rocket Electronics Co.,Ltd.'s (SZSE:301348) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Foshan Blue Rocket ElectronicsLtd

The Impact Of Unusual Items On Profit

To properly understand Foshan Blue Rocket ElectronicsLtd's profit results, we need to consider the CN¥4.9m expense attributed to unusual items. 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. If Foshan Blue Rocket ElectronicsLtd 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 Foshan Blue Rocket ElectronicsLtd.

Our Take On Foshan Blue Rocket ElectronicsLtd's Profit Performance

Because unusual items detracted from Foshan Blue Rocket ElectronicsLtd'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 Foshan Blue Rocket ElectronicsLtd'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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've found that Foshan Blue Rocket ElectronicsLtd has 2 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

This note has only looked at a single factor that sheds light on the nature of Foshan Blue Rocket 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 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.