We Think Ningbo Shuanglin Auto PartsLtd's (SZSE:300100) Solid Earnings Are Understated

Ningbo Shuanglin Auto Parts Co.,Ltd.'s (SZSE:300100) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

See our latest analysis for Ningbo Shuanglin Auto PartsLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ningbo Shuanglin Auto PartsLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥87m due to unusual items. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Ningbo Shuanglin Auto PartsLtd to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ningbo Shuanglin Auto PartsLtd.

Our Take On Ningbo Shuanglin Auto PartsLtd's Profit Performance

Unusual items (expenses) detracted from Ningbo Shuanglin Auto PartsLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Ningbo Shuanglin Auto PartsLtd's statutory profit actually understates its earnings potential! And the EPS is up 5.3% over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 2 warning signs for Ningbo Shuanglin Auto PartsLtd and you'll want to know about these bad boys.

This note has only looked at a single factor that sheds light on the nature of Ningbo Shuanglin Auto PartsLtd'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.