There May Be Some Bright Spots In Shenzhen Ysstech Info-TechLtd's (SZSE:300377) Earnings

Shenzhen Ysstech Info-Tech Co.,Ltd's (SZSE:300377) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. However, we think the company is showing some signs that things are more promising than they seem.

See our latest analysis for Shenzhen Ysstech Info-TechLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shenzhen Ysstech Info-TechLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥21m due 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. 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. If Shenzhen Ysstech Info-TechLtd 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 Shenzhen Ysstech Info-TechLtd.

Our Take On Shenzhen Ysstech Info-TechLtd's Profit Performance

Because unusual items detracted from Shenzhen Ysstech Info-TechLtd'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 Shenzhen Ysstech Info-TechLtd's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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. Every company has risks, and we've spotted 3 warning signs for Shenzhen Ysstech Info-TechLtd (of which 2 are significant!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Shenzhen Ysstech Info-TechLtd'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 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.