Zhejiang Benli Technology Co., Ltd.'s (SZSE:301065) stock showed strength after its weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

Check out our latest analysis for Zhejiang Benli Technology

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Zhejiang Benli Technology's profit received a boost of CN¥6.4m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Zhejiang Benli Technology doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhejiang Benli Technology.

Our Take On Zhejiang Benli Technology's Profit Performance

We'd posit that Zhejiang Benli Technology's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Zhejiang Benli Technology's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in 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 Zhejiang Benli Technology, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Zhejiang Benli Technology and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Zhejiang Benli Technology's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.