Some May Be Optimistic About Sany Heavy Equipment International Holdings' (HKG:631) Earnings

The market for Sany Heavy Equipment International Holdings Company Limited's (HKG:631) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

We've discovered 2 warning signs about Sany Heavy Equipment International Holdings. View them for free.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Sany Heavy Equipment International Holdings' profit was reduced by CN¥368m, 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Sany Heavy Equipment International Holdings 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 Sany Heavy Equipment International Holdings' Profit Performance

Because unusual items detracted from Sany Heavy Equipment International Holdings' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Sany Heavy Equipment International Holdings' 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. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 2 warning signs for Sany Heavy Equipment International Holdings and you'll want to know about these.

Today we've zoomed in on a single data point to better understand the nature of Sany Heavy Equipment International Holdings' 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. 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.