Investors were disappointed by Jiangsu Wujin Stainless Steel Pipe Group CO.,LTD.'s (SHSE:603878 ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.
How Do Unusual Items Influence Profit?
For anyone who wants to understand Jiangsu Wujin Stainless Steel Pipe GroupLTD's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥32m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
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 Jiangsu Wujin Stainless Steel Pipe GroupLTD's Profit Performance
We'd posit that Jiangsu Wujin Stainless Steel Pipe GroupLTD's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Jiangsu Wujin Stainless Steel Pipe GroupLTD's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 33% over the last three years. 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. If you want to do dive deeper into Jiangsu Wujin Stainless Steel Pipe GroupLTD, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Jiangsu Wujin Stainless Steel Pipe GroupLTD has 1 warning sign and it would be unwise to ignore this.
This note has only looked at a single factor that sheds light on the nature of Jiangsu Wujin Stainless Steel Pipe GroupLTD'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.