Guangxi Oriental Intelligent Manufacturing Technology Co., Ltd.'s (SZSE:002175) stock showed strength, with investors undeterred by its weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Guangxi Oriental Intelligent Manufacturing Technology's profit received a boost of CN¥4.6m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Guangxi Oriental Intelligent Manufacturing Technology.

Our Take On Guangxi Oriental Intelligent Manufacturing Technology's Profit Performance

Arguably, Guangxi Oriental Intelligent Manufacturing Technology's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Guangxi Oriental Intelligent Manufacturing Technology's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Guangxi Oriental Intelligent Manufacturing Technology has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Guangxi Oriental Intelligent Manufacturing Technology's profit. But there are plenty of other ways to inform your opinion of a company. 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.