There May Be Reason For Hope In China Times Publishing's (GTSM:8923) Disappointing Earnings

Shareholders appeared unconcerned with China Times Publishing Co.'s (GTSM:8923) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for China Times Publishing

How Do Unusual Items Influence Profit?

For anyone who wants to understand China Times Publishing's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by NT$2.0m due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect China Times Publishing to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of China Times Publishing.

Our Take On China Times Publishing's Profit Performance

Because unusual items detracted from China Times Publishing'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 China Times Publishing's statutory profit actually understates its earnings potential! 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 China Times Publishing as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for China Times Publishing you should be mindful of and 1 of these is concerning.

This note has only looked at a single factor that sheds light on the nature of China Times Publishing'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. 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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