Shareholders appeared unconcerned with Tangshan Sunfar Silicon Industries Co.,Ltd.'s (SHSE:603938) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Tangshan Sunfar Silicon IndustriesLtd's profit was reduced by CN¥46m, 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Tangshan Sunfar Silicon IndustriesLtd 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 Tangshan Sunfar Silicon IndustriesLtd's Profit Performance

Because unusual items detracted from Tangshan Sunfar Silicon IndustriesLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Tangshan Sunfar Silicon IndustriesLtd's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back 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. If you want to do dive deeper into Tangshan Sunfar Silicon IndustriesLtd, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Tangshan Sunfar Silicon IndustriesLtd and you'll want to know about these bad boys.

This note has only looked at a single factor that sheds light on the nature of Tangshan Sunfar Silicon IndustriesLtd'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 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.