We Think You Should Be Aware Of Some Concerning Factors In Trio Industrial Electronics Group's (HKG:1710) Earnings

The market for Trio Industrial Electronics Group Limited's (HKG:1710) stock was strong after it released a healthy earnings report last week. While the profit numbers were good, our analysis has found some concerning factors that shareholders should be aware of.

See our latest analysis for Trio Industrial Electronics Group

The Impact Of Unusual Items On Profit

To properly understand Trio Industrial Electronics Group's profit results, we need to consider the HK$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. Which is hardly surprising, given the name. 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 Trio Industrial Electronics Group.

Our Take On Trio Industrial Electronics Group's Profit Performance

Arguably, Trio Industrial Electronics Group's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Trio Industrial Electronics Group's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 30% in the last year. 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 Trio Industrial Electronics Group, you'd also look into what risks it is currently facing. For example, Trio Industrial Electronics Group has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Trio Industrial Electronics Group'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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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