We Think You Can Look Beyond Shenzhen Longood Intelligent ElectricLTD's (SZSE:300543) Lackluster Earnings

Soft earnings didn't appear to concern Shenzhen Longood Intelligent Electric Co.,LTD's (SZSE:300543) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for Shenzhen Longood Intelligent ElectricLTD

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shenzhen Longood Intelligent ElectricLTD's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥15m 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. 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 Shenzhen Longood Intelligent ElectricLTD 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 Shenzhen Longood Intelligent ElectricLTD.

Our Take On Shenzhen Longood Intelligent ElectricLTD's Profit Performance

Unusual items (expenses) detracted from Shenzhen Longood Intelligent ElectricLTD's earnings over the last year, but we might see an improvement next year. Because of this, we think Shenzhen Longood Intelligent ElectricLTD's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. So while earnings quality is important, it's equally important to consider the risks facing Shenzhen Longood Intelligent ElectricLTD at this point in time. Be aware that Shenzhen Longood Intelligent ElectricLTD is showing 4 warning signs in our investment analysis and 1 of those shouldn't be ignored...

Today we've zoomed in on a single data point to better understand the nature of Shenzhen Longood Intelligent ElectricLTD'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.