There May Be Reason For Hope In Pacific Basin Shipping's (HKG:2343) Disappointing Earnings

Soft earnings didn't appear to concern Pacific Basin Shipping Limited's (HKG:2343) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

View our latest analysis for Pacific Basin Shipping

The Impact Of Unusual Items On Profit

For anyone who wants to understand Pacific Basin Shipping's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$11m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Pacific Basin Shipping 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 Pacific Basin Shipping's Profit Performance

Because unusual items detracted from Pacific Basin Shipping'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 Pacific Basin Shipping's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over 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'd like to know more about Pacific Basin Shipping as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Pacific Basin Shipping, and understanding them should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Pacific Basin Shipping'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. 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.