Qtone Education Group (Guangdong) Co.,Ltd's (SZSE:300359) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

Check out our latest analysis for Qtone Education Group (Guangdong)Ltd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Qtone Education Group (Guangdong)Ltd's profit received a boost of CN¥75m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Qtone Education Group (Guangdong)Ltd had a rather significant contribution from unusual items relative to its profit to September 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Qtone Education Group (Guangdong)Ltd.

Our Take On Qtone Education Group (Guangdong)Ltd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Qtone Education Group (Guangdong)Ltd's earnings a poor guide to its underlying profitability. For this reason, we think that Qtone Education Group (Guangdong)Ltd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The good news is that, its earnings per share increased by 44% in 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Qtone Education Group (Guangdong)Ltd and you'll want to know about this.

This note has only looked at a single factor that sheds light on the nature of Qtone Education Group (Guangdong)Ltd'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. 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.