Weak Statutory Earnings May Not Tell The Whole Story For Jiangsu LiXing General Steel BallLtd (SZSE:300421)

Despite Jiangsu LiXing General Steel Ball Co.,Ltd.'s (SZSE:300421) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Jiangsu LiXing General Steel BallLtd.

View our latest analysis for Jiangsu LiXing General Steel BallLtd

The Impact Of Unusual Items On Profit

To properly understand Jiangsu LiXing General Steel BallLtd's profit results, we need to consider the CN¥5.9m gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Jiangsu LiXing General Steel BallLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jiangsu LiXing General Steel BallLtd.

Our Take On Jiangsu LiXing General Steel BallLtd's Profit Performance

We'd posit that Jiangsu LiXing General Steel BallLtd's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Jiangsu LiXing General Steel BallLtd's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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 LiXing General Steel BallLtd, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Jiangsu LiXing General Steel BallLtd and you'll want to know about this.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu LiXing General Steel BallLtd'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com