Guangdong Shenglu Telecommunication Tech. Co., Ltd.'s (SZSE:002446) stock was strong despite it releasing a soft earnings report last week. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Guangdong Shenglu Telecommunication Tech's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥119m 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 that's hardly a surprise given these line items are considered unusual. In the twelve months to March 2024, Guangdong Shenglu Telecommunication Tech had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

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 Guangdong Shenglu Telecommunication Tech's Profit Performance

As we discussed above, we think the significant unusual expense will make Guangdong Shenglu Telecommunication Tech's statutory profit lower than it would otherwise have been. Because of this, we think Guangdong Shenglu Telecommunication Tech's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over the last year. 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. If you'd like to know more about Guangdong Shenglu Telecommunication Tech as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Guangdong Shenglu Telecommunication Tech and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Guangdong Shenglu Telecommunication Tech'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 that insiders are buying 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.