Shenzhen Ysstech Info-Tech Co.,Ltd's (SZSE:300377) strong earnings report was rewarded with a positive stock price move. We have done some analysis, and we found several positive factors beyond the profit numbers.
The Impact Of Unusual Items On Profit
To properly understand Shenzhen Ysstech Info-TechLtd's profit results, we need to consider the CN¥21m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Shenzhen Ysstech Info-TechLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shenzhen Ysstech Info-TechLtd.
Our Take On Shenzhen Ysstech Info-TechLtd's Profit Performance
Unusual items (expenses) detracted from Shenzhen Ysstech Info-TechLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Shenzhen Ysstech Info-TechLtd's earnings potential is at least as good as it seems, and maybe even better! Furthermore, it has done a great job growing EPS over the last year. 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. If you want to do dive deeper into Shenzhen Ysstech Info-TechLtd, you'd also look into what risks it is currently facing. To help with this, we've discovered 4 warning signs (2 can't be ignored!) that you ought to be aware of before buying any shares in Shenzhen Ysstech Info-TechLtd.
This note has only looked at a single factor that sheds light on the nature of Shenzhen Ysstech Info-TechLtd's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. 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.