The subdued stock price reaction suggests that Dalian Sunasia Tourism Holding CO.,LTD's (SHSE:600593) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures.

The Impact Of Unusual Items On Profit

To properly understand Dalian Sunasia Tourism HoldingLTD's profit results, we need to consider the CN¥42m 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 Dalian Sunasia Tourism HoldingLTD 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 Dalian Sunasia Tourism HoldingLTD.

Our Take On Dalian Sunasia Tourism HoldingLTD's Profit Performance

Unusual items (expenses) detracted from Dalian Sunasia Tourism HoldingLTD's earnings over the last year, but we might see an improvement next year. Because of this, we think Dalian Sunasia Tourism HoldingLTD'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. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 3 warning signs for Dalian Sunasia Tourism HoldingLTD (1 makes us a bit uncomfortable) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Dalian Sunasia Tourism HoldingLTD'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. 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.

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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.