The market seemed underwhelmed by last week's earnings announcement from LifeTech Scientific Corporation (HKG:1302) despite the healthy numbers. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

View our latest analysis for LifeTech Scientific

The Impact Of Unusual Items On Profit

Importantly, our data indicates that LifeTech Scientific's profit was reduced by CN¥51m, 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. Assuming those unusual expenses don't come up again, we'd therefore expect LifeTech Scientific to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of LifeTech Scientific.

Our Take On LifeTech Scientific's Profit Performance

Unusual items (expenses) detracted from LifeTech Scientific's earnings over the last year, but we might see an improvement next year. Because of this, we think LifeTech Scientific's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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'd like to know more about LifeTech Scientific as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for LifeTech Scientific you should know about.

Today we've zoomed in on a single data point to better understand the nature of LifeTech Scientific'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.