The most recent earnings report from Jiangsu Kuangshun Photosensitivity New-Material Stock Co., Ltd. (SZSE:300537) was disappointing for shareholders. However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Jiangsu Kuangshun Photosensitivity New-Material Stock's profit was reduced by CN¥38m, 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. In the twelve months to September 2024, Jiangsu Kuangshun Photosensitivity New-Material Stock had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its 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 Jiangsu Kuangshun Photosensitivity New-Material Stock's Profit Performance

As we discussed above, we think the significant unusual expense will make Jiangsu Kuangshun Photosensitivity New-Material Stock's statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Jiangsu Kuangshun Photosensitivity New-Material Stock's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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 Jiangsu Kuangshun Photosensitivity New-Material Stock at this point in time. You'd be interested to know, that we found 4 warning signs for Jiangsu Kuangshun Photosensitivity New-Material Stock and you'll want to know about these.

This note has only looked at a single factor that sheds light on the nature of Jiangsu Kuangshun Photosensitivity New-Material Stock'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.