Hangzhou Sunrise TechnologyLtd's (SZSE:300360) Earnings Are Weaker Than They Seem

Hangzhou Sunrise Technology Co.,Ltd.'s (SZSE:300360) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

View our latest analysis for Hangzhou Sunrise TechnologyLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Hangzhou Sunrise TechnologyLtd's profit received a boost of CN¥94m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. If Hangzhou Sunrise TechnologyLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Hangzhou Sunrise TechnologyLtd's Profit Performance

Arguably, Hangzhou Sunrise TechnologyLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Hangzhou Sunrise TechnologyLtd's true underlying earnings power is actually less than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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. If you want to do dive deeper into Hangzhou Sunrise TechnologyLtd, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Hangzhou Sunrise TechnologyLtd you should know about.

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