The most recent earnings report from Zhejiang Viewshine Intelligent Meter Co.,Ltd (SZSE:002849) was disappointing for shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Zhejiang Viewshine Intelligent MeterLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥46m due 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Zhejiang Viewshine Intelligent MeterLtd 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 Zhejiang Viewshine Intelligent MeterLtd.

Our Take On Zhejiang Viewshine Intelligent MeterLtd's Profit Performance

Unusual items (expenses) detracted from Zhejiang Viewshine Intelligent MeterLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Zhejiang Viewshine Intelligent MeterLtd'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. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing Zhejiang Viewshine Intelligent MeterLtd at this point in time. To help with this, we've discovered 3 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Zhejiang Viewshine Intelligent MeterLtd.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Viewshine Intelligent MeterLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.