There May Be Reason For Hope In Chengdu Jiafaantai Education TechnologyLtd's (SZSE:300559) Disappointing Earnings

The market was pleased with the recent earnings report from Chengdu Jiafaantai Education Technology Co.,Ltd. (SZSE:300559), despite the profit numbers being soft. However, we think the company is showing some signs that things are more promising than they seem.

See our latest analysis for Chengdu Jiafaantai Education TechnologyLtd

How Do Unusual Items Influence Profit?

To properly understand Chengdu Jiafaantai Education TechnologyLtd's profit results, we need to consider the CN¥6.4m expense attributed to unusual items. 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 that's hardly a surprise given these line items are considered unusual. If Chengdu Jiafaantai Education TechnologyLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Chengdu Jiafaantai Education TechnologyLtd's Profit Performance

Because unusual items detracted from Chengdu Jiafaantai Education TechnologyLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Chengdu Jiafaantai Education TechnologyLtd's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Chengdu Jiafaantai Education TechnologyLtd as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with Chengdu Jiafaantai Education TechnologyLtd, and understanding them should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Chengdu Jiafaantai Education TechnologyLtd'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 with significant insider holdings 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.