Jiaxing ZMAX Optech Co., Ltd.'s (SHSE:688307) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. 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 Jiaxing ZMAX Optech's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥3.4m 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. Assuming those unusual expenses don't come up again, we'd therefore expect Jiaxing ZMAX Optech 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 Jiaxing ZMAX Optech's Profit Performance

Because unusual items detracted from Jiaxing ZMAX Optech'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 Jiaxing ZMAX Optech's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 6.5% annually, over the last three years. 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. In terms of investment risks, we've identified 2 warning signs with Jiaxing ZMAX Optech, and understanding these should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Jiaxing ZMAX Optech'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.