Soft earnings didn't appear to concern COSCO SHIPPING Energy Transportation Co., Ltd.'s (HKG:1138) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.
See our latest analysis for COSCO SHIPPING Energy Transportation
How Do Unusual Items Influence Profit?
Importantly, our data indicates that COSCO SHIPPING Energy Transportation's profit was reduced by CN¥794m, 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If COSCO SHIPPING Energy Transportation doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
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 COSCO SHIPPING Energy Transportation's Profit Performance
Because unusual items detracted from COSCO SHIPPING Energy Transportation'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 COSCO SHIPPING Energy Transportation's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing COSCO SHIPPING Energy Transportation at this point in time. Every company has risks, and we've spotted 3 warning signs for COSCO SHIPPING Energy Transportation you should know about.
Today we've zoomed in on a single data point to better understand the nature of COSCO SHIPPING Energy Transportation's profit. But there are plenty of other ways to inform your opinion of a company. 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 with significant insider holdings 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.