Bafang Electric (Suzhou) Co.,Ltd.'s (SHSE:603489) stock showed strength, with investors undeterred by its weak earnings report. While shareholders may be willing to overlook soft profit numbers, we believe that they should also be taking into account some other factors which may be cause for concern.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Bafang Electric (Suzhou)Ltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥34m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Bafang Electric (Suzhou)Ltd's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Bafang Electric (Suzhou)Ltd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Bafang Electric (Suzhou)Ltd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Bafang Electric (Suzhou)Ltd's underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about Bafang Electric (Suzhou)Ltd as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Bafang Electric (Suzhou)Ltd (including 1 which is significant).

This note has only looked at a single factor that sheds light on the nature of Bafang Electric (Suzhou)Ltd'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.