The subdued stock price reaction suggests that Tianjin Capital Environmental Protection Group Company Limited's (SHSE:600874) strong earnings didn't offer any surprises. Our analysis suggests that investors might be missing some promising details.
The Impact Of Unusual Items On Profit
To properly understand Tianjin Capital Environmental Protection Group's profit results, we need to consider the CN¥174m 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Tianjin Capital Environmental Protection Group 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 Tianjin Capital Environmental Protection Group's Profit Performance
Unusual items (expenses) detracted from Tianjin Capital Environmental Protection Group's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Tianjin Capital Environmental Protection Group's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 38% per year over the last three years. 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. If you want to do dive deeper into Tianjin Capital Environmental Protection Group, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for Tianjin Capital Environmental Protection Group (1 is a bit concerning) you should be familiar with.
Today we've zoomed in on a single data point to better understand the nature of Tianjin Capital Environmental Protection Group'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.