Shenzhen King Explorer Science and Technology’s (SZSE:002917) Strong Earnings Are Good Quality

Even Shenzhen King Explorer Science and Technology Corporation (SZSE:002917) Recent earnings figures have been robust, but the market didn’t seem to notice. Our analysis shows that investors may be missing some promising details.

Check out our latest analysis for Shenzhen King Explorer Science and Technology

How do unusual items affect profits?

To fully understand Shenzhen King Explorer Science and Technology’s earnings results, we need to consider expenses of CN¥26 million attributed to unusual items. While deductions due to unusual items are initially disappointing, there is a silver lining. When we analyzed the vast majority of listed companies worldwide, we found that important unusual items are often not repeated. And that’s no surprise since these line items are considered unusual. Assuming these unusual expenses don’t happen again, we therefore expect Shenzhen King Explorer Science and Technology to post higher profits next year, all else being equal.

You may be wondering what analysts are predicting in terms of future profitability. Fortunately, you can click here to see an interactive graph showing future profitability, based on their estimates.

Our view on Shenzhen King Explorer’s science and technology earnings performance

Since unusual factors have had a negative impact on Shenzhen King Explorer Science and Technology’s earnings over the past year, you could argue that we can expect a better result for the current quarter. Based on this observation, we think it’s likely that Shenzhen King Explorer Science and Technology’s statutory profit actually understates its earnings potential! Furthermore, the company has done an excellent job of growing earnings per share over the past year. Ultimately, if you want to understand the business properly, it is essential to consider more than just the above factors. Keep in mind that when analyzing a stock, it’s worth considering the risks associated with it. As for investment risks, we have identified 1 warning sign with Shenzhen King Explorer Science and Technology, and understanding this should be part of your investment process.

Today we zoomed in on a single data point to better understand the nature of Shenzhen King Explorer Science and Technology’s profits. But there are plenty of other ways to substantiate your opinion about a company. Some people consider a high return on equity as a good sign of a quality company. So you might want to see this free collection of companies with high return on equity, or this list of stocks that insiders are buying.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.