Jiangsu Pacific Precision Forging's (SZSE:300258) Shareholders Have More To Worry About Than Only Soft Earnings

Jiangsu Pacific Precision Forging Co., Ltd.'s (SZSE:300258) recent weak earnings report didn't cause a big stock movement. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

See our latest analysis for Jiangsu Pacific Precision Forging

The Impact Of Unusual Items On Profit

For anyone who wants to understand Jiangsu Pacific Precision Forging's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥33m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. If Jiangsu Pacific Precision Forging doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Jiangsu Pacific Precision Forging's Profit Performance

Arguably, Jiangsu Pacific Precision Forging's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Jiangsu Pacific Precision Forging's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 17% over the last three years. 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. If you want to do dive deeper into Jiangsu Pacific Precision Forging, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Jiangsu Pacific Precision Forging.

This note has only looked at a single factor that sheds light on the nature of Jiangsu Pacific Precision Forging'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. 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.