Solid Earnings Reflect COSCO SHIPPING Energy Transportation's (HKG:1138) Strength As A Business

COSCO SHIPPING Energy Transportation Co., Ltd. (HKG:1138) just reported healthy earnings but the stock price didn't move much. Investors are probably missing some underlying factors which are encouraging for the future of the company.

See our latest analysis for COSCO SHIPPING Energy Transportation

How Do Unusual Items Influence Profit?

To properly understand COSCO SHIPPING Energy Transportation's profit results, we need to consider the CN¥740m expense attributed to unusual items. 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. If COSCO SHIPPING Energy Transportation doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 COSCO SHIPPING Energy Transportation's Profit Performance

Because unusual items detracted from COSCO SHIPPING Energy Transportation's 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 COSCO SHIPPING Energy Transportation's statutory profit actually understates its earnings potential! And the EPS is up 38% over the last twelve months. 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. You'd be interested to know, that we found 2 warning signs for COSCO SHIPPING Energy Transportation and you'll want to know about these bad boys.

This note has only looked at a single factor that sheds light on the nature of COSCO SHIPPING Energy Transportation's profit. But there are plenty of other ways to inform your opinion of a company. 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 that insiders are buying.

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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.