Shareholders appeared to be happy with Sundart Holdings Limited's (HKG:1568) solid earnings report last week. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Sundart Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by HK$81m 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 that's hardly a surprise given these line items are considered unusual. If Sundart Holdings 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 Sundart Holdings.

Our Take On Sundart Holdings' Profit Performance

Because unusual items detracted from Sundart Holdings' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Sundart Holdings' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share increased by 26% in 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. If you'd like to know more about Sundart Holdings as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Sundart Holdings and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Sundart Holdings' 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 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.