Gettop Acoustic Co., Ltd.'s (SZSE:002655) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.

The Impact Of Unusual Items On Profit

To properly understand Gettop Acoustic's profit results, we need to consider the CN¥11m 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, after all, that's exactly what the accounting terminology implies. If Gettop Acoustic 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 Gettop Acoustic.

Our Take On Gettop Acoustic's Profit Performance

Because unusual items detracted from Gettop Acoustic'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 Gettop Acoustic's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 15% over the last twelve months. 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. While it's very important to consider the profit and loss statement, you can also learn a lot about a company by looking at its balance sheet. If you're interested we have a graphic representation of Gettop Acoustic's balance sheet.

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