Despite some strong returns, the market for Shanghai International Airport Co., Ltd. (SHSE:600009) has not moved much. Our analysis suggests that this could be because shareholders have noticed some troubling underlying factors.

Check out our latest analysis of Shanghai International Airport

How do unusual items affect profits?

For anyone looking to understand Shanghai International Airport’s profit beyond the statutory numbers, it’s important to know that statutory profit over the last twelve months came from CN¥159 million worth of special items. While it’s always nice to have a higher profit, sometimes a large contribution from special items dampens our enthusiasm. When we analyzed the vast majority of listed companies globally, we found that significant special items are often not repeated. Which is hardly surprising, given the name. If that contribution is not repeated at Shanghai International Airport, we would expect its current-year profit to decline, all things being equal.

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

Our assessment of Shanghai International Airport’s profit development

It could be argued that Shanghai International Airport’s statutory profits have been distorted by unusual items boosting profits. For this reason, we think Shanghai International Airport’s statutory profits could be better than its underlying earnings power. On the positive side, the company showed enough improvement to post a profit this year, after losing money last year. Of course, we’ve only scratched the surface when analyzing its profits; you might also consider margins, forecast growth and return on capital, among other things. Of course, we like to look at historical data to form our opinion on a company, but it can be really valuable to consider what other analysts are forecasting. Fortunately, you can see analyst forecasts by clicking here.

Today we’ve focused on a single data point to better understand the nature of Shanghai International Airport’s profits. But there’s always more to discover if you can focus on the details. For example, many people consider a high return on equity to be an indication of a favorable business situation, while others like to “follow the money” and look for stocks that insiders are buying. Although this may require a little research, you may find that free Collection of companies with high return on equity or this list of stocks with significant insider holdings may prove useful.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.