Investors signalled that they were pleased with Anhui Transport Consulting & Design Institute Co.,Ltd.'s (SHSE:603357) most recent earnings report. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Anhui Transport Consulting & Design InstituteLtd's profit was reduced by CN¥57m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. If Anhui Transport Consulting & Design InstituteLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 Anhui Transport Consulting & Design InstituteLtd's Profit Performance

Unusual items (expenses) detracted from Anhui Transport Consulting & Design InstituteLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Anhui Transport Consulting & Design InstituteLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 30% per year 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. So while earnings quality is important, it's equally important to consider the risks facing Anhui Transport Consulting & Design InstituteLtd at this point in time. At Simply Wall St, we found 1 warning sign for Anhui Transport Consulting & Design InstituteLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Anhui Transport Consulting & Design InstituteLtd's 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 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.