Keli Sensing Technology (Ningbo) Co.,Ltd.'s (SHSE:603662) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Keli Sensing Technology (Ningbo)Ltd's profit received a boost of CN¥38m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. 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 Keli Sensing Technology (Ningbo)Ltd's Profit Performance
Arguably, Keli Sensing Technology (Ningbo)Ltd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Keli Sensing Technology (Ningbo)Ltd's true underlying earnings power is actually less than its statutory profit. But at least holders can take some solace from the 9.2% per annum growth in EPS for the last three. 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 Keli Sensing Technology (Ningbo)Ltd, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Keli Sensing Technology (Ningbo)Ltd, and understanding it should be part of your investment process.
This note has only looked at a single factor that sheds light on the nature of Keli Sensing Technology (Ningbo)Ltd'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. 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.