The market shrugged off Metasurface Technologies Holdings Limited's (HKG:8637) solid earnings report. We think that investors might be worried about some concerning underlying factors.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Metasurface Technologies Holdings' profit received a boost of S$598k 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If Metasurface Technologies Holdings doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Metasurface Technologies Holdings .

Our Take On Metasurface Technologies Holdings' Profit Performance

Arguably, Metasurface Technologies Holdings' statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Metasurface Technologies Holdings' statutory profits are better than its underlying earnings power. The good news is that, its earnings per share increased by 17% in 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Metasurface Technologies Holdings (including 1 which shouldn't be ignored) .

Today we've zoomed in on a single data point to better understand the nature of Metasurface Technologies Holdings' 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.