Investors Can Find Comfort In China Travel International Investment Hong Kong's (HKG:308) Earnings Quality

Shareholders appeared unconcerned with China Travel International Investment Hong Kong Limited's (HKG:308) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Check out our latest analysis for China Travel International Investment Hong Kong

How Do Unusual Items Influence Profit?

Importantly, our data indicates that China Travel International Investment Hong Kong's profit was reduced by HK$144m, 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 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 China Travel International Investment Hong Kong 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 Travel International Investment Hong Kong's Profit Performance

Because unusual items detracted from China Travel International Investment Hong Kong's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think China Travel International Investment Hong Kong'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. 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 China Travel International Investment Hong Kong, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for China Travel International Investment Hong Kong and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of China Travel International Investment Hong Kong'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.