There May Be Some Bright Spots In Zhuhai Kles TechnologyLtd's (SZSE:301314) Earnings

Zhuhai Kles Technology Co.,Ltd's (SZSE:301314) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. We think that investors might be looking at some positive factors beyond the earnings numbers.

Check out our latest analysis for Zhuhai Kles TechnologyLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Zhuhai Kles TechnologyLtd's profit was reduced by CN¥2.2m, 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. If Zhuhai Kles TechnologyLtd 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 Zhuhai Kles TechnologyLtd.

Our Take On Zhuhai Kles TechnologyLtd's Profit Performance

Unusual items (expenses) detracted from Zhuhai Kles TechnologyLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Zhuhai Kles TechnologyLtd's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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 Zhuhai Kles TechnologyLtd, you'd also look into what risks it is currently facing. Be aware that Zhuhai Kles TechnologyLtd is showing 4 warning signs in our investment analysis and 2 of those shouldn't be ignored...

This note has only looked at a single factor that sheds light on the nature of Zhuhai Kles TechnologyLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.