Earnings Troubles May Signal Larger Issues for Triumph Science & TechnologyLtd (SHSE:600552) Shareholders

Last week's earnings announcement from Triumph Science & Technology Co.,Ltd (SHSE:600552) was disappointing to investors, with a sluggish profit figure. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

Check out our latest analysis for Triumph Science & TechnologyLtd

The Impact Of Unusual Items On Profit

To properly understand Triumph Science & TechnologyLtd's profit results, we need to consider the CN¥187m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Triumph Science & TechnologyLtd had a rather significant contribution from unusual items relative to its profit to December 2023. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Triumph Science & TechnologyLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Triumph Science & TechnologyLtd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Triumph Science & TechnologyLtd's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. So while earnings quality is important, it's equally important to consider the risks facing Triumph Science & TechnologyLtd at this point in time. Every company has risks, and we've spotted 2 warning signs for Triumph Science & TechnologyLtd (of which 1 is potentially serious!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Triumph Science & TechnologyLtd's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.