Investors signalled that they were pleased with Xiamen Voke Mold & Plastic Engineering Co., Ltd.'s (SZSE:301196) most recent earnings report. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Xiamen Voke Mold & Plastic Engineering's profit was reduced by CN¥26m, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Xiamen Voke Mold & Plastic Engineering 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 Xiamen Voke Mold & Plastic Engineering.

Our Take On Xiamen Voke Mold & Plastic Engineering's Profit Performance

Because unusual items detracted from Xiamen Voke Mold & Plastic Engineering'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 Xiamen Voke Mold & Plastic Engineering's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 15% over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Xiamen Voke Mold & Plastic Engineering has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Xiamen Voke Mold & Plastic Engineering'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. 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.