Jiangsu Bide Science and Technology Co.,Ltd. (SHSE:605298) just released a solid earnings report, and the stock displayed some strength. Despite this, our analysis suggests that there are some factors weakening the foundations of those good profit numbers.
How Do Unusual Items Influence Profit?
For anyone who wants to understand Jiangsu Bide Science and TechnologyLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥12m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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, after all, that's exactly what the accounting terminology implies. Jiangsu Bide Science and TechnologyLtd had a rather significant contribution from unusual items relative to its profit 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.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jiangsu Bide Science and TechnologyLtd.
Our Take On Jiangsu Bide Science and TechnologyLtd's Profit Performance
As we discussed above, we think the significant positive unusual item makes Jiangsu Bide Science and TechnologyLtd's earnings a poor guide to its underlying profitability. For this reason, we think that Jiangsu Bide Science and TechnologyLtd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The good news is that its earnings per share increased slightly 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. If you'd like to know more about Jiangsu Bide Science and TechnologyLtd as a business, it's important to be aware of any risks it's facing. For example, Jiangsu Bide Science and TechnologyLtd has 4 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
Today we've zoomed in on a single data point to better understand the nature of Jiangsu Bide Science and TechnologyLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.
