There May Be Reason For Hope In Guangdong Shenglu Telecommunication Tech's (SZSE:002446) Disappointing Earnings

Guangdong Shenglu Telecommunication Tech. Co., Ltd.'s (SZSE:002446) stock was strong despite it releasing a soft earnings report last week. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

Check out our latest analysis for Guangdong Shenglu Telecommunication Tech

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Guangdong Shenglu Telecommunication Tech's profit was reduced by CN¥119m, 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. Guangdong Shenglu Telecommunication Tech took a rather significant hit from unusual items in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its 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 Guangdong Shenglu Telecommunication Tech's Profit Performance

As we mentioned previously, the Guangdong Shenglu Telecommunication Tech's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Guangdong Shenglu Telecommunication Tech's statutory profit actually understates its earnings potential! 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. Case in point: We've spotted 2 warning signs for Guangdong Shenglu Telecommunication Tech you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Guangdong Shenglu Telecommunication Tech'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.