Tianjin Motor Dies Co.,Ltd.'s (SZSE:002510) strong earnings report was rewarded with a positive stock price move. We did some digging and found some further encouraging factors that investors will like.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Tianjin Motor DiesLtd's profit was reduced by CN¥24m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. If Tianjin Motor DiesLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Tianjin Motor DiesLtd.

Our Take On Tianjin Motor DiesLtd's Profit Performance

Unusual items (expenses) detracted from Tianjin Motor DiesLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Tianjin Motor DiesLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 32% in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. You can see our latest analysis on Tianjin Motor DiesLtd's balance sheet health here.

This note has only looked at a single factor that sheds light on the nature of Tianjin Motor DiesLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.