There May Be Reason For Hope In Ningbo Shenglong Automotive Powertrain SystemLtd's (SHSE:603178) Disappointing Earnings

Ningbo Shenglong Automotive Powertrain System Co.,Ltd.'s (SHSE:603178) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

See our latest analysis for Ningbo Shenglong Automotive Powertrain SystemLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ningbo Shenglong Automotive Powertrain SystemLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥10m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Ningbo Shenglong Automotive Powertrain SystemLtd to produce a higher profit next year, all else being equal.

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 Ningbo Shenglong Automotive Powertrain SystemLtd's Profit Performance

Unusual items (expenses) detracted from Ningbo Shenglong Automotive Powertrain SystemLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Ningbo Shenglong Automotive Powertrain SystemLtd's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into Ningbo Shenglong Automotive Powertrain SystemLtd, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Ningbo Shenglong Automotive Powertrain SystemLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Ningbo Shenglong Automotive Powertrain SystemLtd'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 that insiders are buying 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.