Shenzhen Feima International Supply Chain's (SZSE:002210) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Investors were disappointed by Shenzhen Feima International Supply Chain Co., Ltd.'s (SZSE:002210 ) latest earnings release. We did some analysis, and found that there are some reasons to be cautious about the headline numbers.

View our latest analysis for Shenzhen Feima International Supply Chain

The Impact Of Unusual Items On Profit

To properly understand Shenzhen Feima International Supply Chain's profit results, we need to consider the CN¥5.1m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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 items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shenzhen Feima International Supply Chain.

Our Take On Shenzhen Feima International Supply Chain's Profit Performance

We'd posit that Shenzhen Feima International Supply Chain's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Shenzhen Feima International Supply Chain's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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 want to do dive deeper into Shenzhen Feima International Supply Chain, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Shenzhen Feima International Supply Chain you should know about.

Today we've zoomed in on a single data point to better understand the nature of Shenzhen Feima International Supply Chain'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.