Investors Can Find Comfort In Nanning Baling Technology's (SZSE:002592) Earnings Quality

The most recent earnings report from Nanning Baling Technology Co., Ltd. (SZSE:002592) was disappointing for shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

See our latest analysis for Nanning Baling Technology

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Nanning Baling Technology's profit was reduced by CN¥20m, 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. 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. Nanning Baling Technology took a rather significant hit from unusual items in the year to September 2024. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Nanning Baling Technology.

Our Take On Nanning Baling Technology's Profit Performance

As we discussed above, we think the significant unusual expense will make Nanning Baling Technology's statutory profit lower than it would otherwise have been. Based on this observation, we consider it possible that Nanning Baling Technology'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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Nanning Baling Technology has 2 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Nanning Baling 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. 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.