The market seemed underwhelmed by the solid earnings posted by China Railway Tielong Container Logistics Co., Ltd (SHSE:600125) recently. Our analysis suggests that there are some reasons for hope that investors should be aware of.

How Do Unusual Items Influence Profit?

To properly understand China Railway Tielong Container Logistics' profit results, we need to consider the CN¥71m expense attributed 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect China Railway Tielong Container Logistics to produce a higher profit next year, all else being equal.

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 China Railway Tielong Container Logistics' Profit Performance

Unusual items (expenses) detracted from China Railway Tielong Container Logistics' earnings over the last year, but we might see an improvement next year. Because of this, we think China Railway Tielong Container Logistics' earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 25% annually, over the last three years. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 1 warning sign for China Railway Tielong Container Logistics you should know about.

This note has only looked at a single factor that sheds light on the nature of China Railway Tielong Container Logistics' 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.