The recent earnings posted by China State Construction International Holdings Limited (HKG:3311) were solid, but the stock didn't move as much as we expected. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for China State Construction International Holdings

The Impact Of Unusual Items On Profit

For anyone who wants to understand China State Construction International Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from HK$804m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 China State Construction International Holdings' Profit Performance

Arguably, China State Construction International Holdings' statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that China State Construction International Holdings' statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 56% over the last three years. 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 China State Construction International Holdings, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for China State Construction International Holdings (1 shouldn't be ignored) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of China State Construction International Holdings' 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.