The market was pleased with the recent earnings report from Triductor Technology (Suzhou) Inc. (SHSE:688259), despite the profit numbers being soft. We think that investors might be looking at some positive factors beyond the earnings numbers.
The Impact Of Unusual Items On Profit
For anyone who wants to understand Triductor Technology (Suzhou)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥16m 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, after all, that's exactly what the accounting terminology implies. Triductor Technology (Suzhou) took a rather significant hit from unusual items in the year to March 2024. 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 Triductor Technology (Suzhou)'s Profit Performance
As we discussed above, we think the significant unusual expense will make Triductor Technology (Suzhou)'s statutory profit lower than it would otherwise have been. Because of this, we think Triductor Technology (Suzhou)'s underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in 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. So while earnings quality is important, it's equally important to consider the risks facing Triductor Technology (Suzhou) at this point in time. Case in point: We've spotted 3 warning signs for Triductor Technology (Suzhou) you should be aware of.
This note has only looked at a single factor that sheds light on the nature of Triductor Technology (Suzhou)'s profit. But there are plenty of other ways to inform your opinion of a company. 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 that insiders are buying.
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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.