Solid Earnings May Not Tell The Whole Story For CITIC Offshore Helicopter (SZSE:000099)

CITIC Offshore Helicopter Co., Ltd. (SZSE:000099) just released a solid earnings report, and the stock displayed some strength. However, we think that shareholders should be cautious as we found some worrying factors underlying the profit.

See our latest analysis for CITIC Offshore Helicopter

How Do Unusual Items Influence Profit?

Importantly, our data indicates that CITIC Offshore Helicopter's profit received a boost of CN¥30m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. If CITIC Offshore Helicopter 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 CITIC Offshore Helicopter's Profit Performance

Arguably, CITIC Offshore Helicopter's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that CITIC Offshore Helicopter's statutory profits are better than its underlying earnings power. The good news is that, its earnings per share increased by 8.8% in the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 1 warning sign for CITIC Offshore Helicopter you should know about.

This note has only looked at a single factor that sheds light on the nature of CITIC Offshore Helicopter'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 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.