Zhejiang Zhongjian Technology Co.,Ltd (SZSE:002779) announced a healthy earnings result recently, and the market rewarded it with a strong uplift in the stock price. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Zhejiang Zhongjian TechnologyLtd's profit was reduced by CN¥11m, 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Zhejiang Zhongjian TechnologyLtd 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 Zhejiang Zhongjian TechnologyLtd.
Our Take On Zhejiang Zhongjian TechnologyLtd's Profit Performance
Because unusual items detracted from Zhejiang Zhongjian TechnologyLtd'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 Zhejiang Zhongjian TechnologyLtd's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 28% 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. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. We've done some analysis and you can see our take on Zhejiang Zhongjian TechnologyLtd's balance sheet by clicking here.
This note has only looked at a single factor that sheds light on the nature of Zhejiang Zhongjian TechnologyLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.