Some Investors May Be Willing To Look Past Suzhou Chunqiu Electronic Technology's (SHSE:603890) Soft Earnings

The market for Suzhou Chunqiu Electronic Technology Co., Ltd.'s (SHSE:603890) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Suzhou Chunqiu Electronic Technology

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Suzhou Chunqiu Electronic Technology's profit was reduced by CN¥52m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Suzhou Chunqiu Electronic Technology to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Suzhou Chunqiu Electronic Technology.

Our Take On Suzhou Chunqiu Electronic Technology's Profit Performance

Unusual items (expenses) detracted from Suzhou Chunqiu Electronic Technology's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Suzhou Chunqiu Electronic Technology's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. If you want to do dive deeper into Suzhou Chunqiu Electronic Technology, you'd also look into what risks it is currently facing. When we did our research, we found 4 warning signs for Suzhou Chunqiu Electronic Technology (1 shouldn't be ignored!) that we believe deserve your full attention.

Today we've zoomed in on a single data point to better understand the nature of Suzhou Chunqiu Electronic Technology'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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.