We Think China Railway Tielong Container Logistics' (SHSE:600125) Solid Earnings Are Understated

Despite posting healthy earnings, China Railway Tielong Container Logistics Co., Ltd's (SHSE:600125 ) stock has been quite weak. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.

View our latest analysis for China Railway Tielong Container Logistics

How Do Unusual Items Influence Profit?

Importantly, our data indicates that China Railway Tielong Container Logistics' profit was reduced by CN¥71m, 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect China Railway Tielong Container Logistics to produce a higher profit next year, all else being equal.

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 China Railway Tielong Container Logistics' Profit Performance

Because unusual items detracted from China Railway Tielong Container Logistics' 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 China Railway Tielong Container Logistics' statutory profit actually understates its earnings potential! And the EPS is up 25% annually, over the last three years. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that China Railway Tielong Container Logistics has 1 warning sign and it would be unwise to ignore this.

This note has only looked at a single factor that sheds light on the nature of China Railway Tielong Container Logistics' 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.