UniTTECLtd's (SZSE:000925) Solid Earnings Have Been Accounted For Conservatively

The market seemed underwhelmed by the solid earnings posted by UniTTEC Co.,Ltd (SZSE:000925) recently. Our analysis suggests that there are some reasons for hope that investors should be aware of.

View our latest analysis for UniTTECLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand UniTTECLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥36m 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 that's hardly a surprise given these line items are considered unusual. If UniTTECLtd 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 UniTTECLtd.

Our Take On UniTTECLtd's Profit Performance

Unusual items (expenses) detracted from UniTTECLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that UniTTECLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate 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. If you want to do dive deeper into UniTTECLtd, you'd also look into what risks it is currently facing. Our analysis shows 3 warning signs for UniTTECLtd (2 are a bit concerning!) and we strongly recommend you look at these before investing.

Today we've zoomed in on a single data point to better understand the nature of UniTTECLtd'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.