Earnings Troubles May Signal Larger Issues for Tianjin Benefo Tejing Electric (SHSE:600468) Shareholders

Despite Tianjin Benefo Tejing Electric Co., Ltd.'s (SHSE:600468) recent earnings report having lackluster headline numbers, the market responded positively. We think that shareholders might be missing some concerning factors that our analysis found.

Check out our latest analysis for Tianjin Benefo Tejing Electric

How Do Unusual Items Influence Profit?

For anyone who wants to understand Tianjin Benefo Tejing Electric's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥12m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Tianjin Benefo Tejing Electric.

Our Take On Tianjin Benefo Tejing Electric's Profit Performance

Arguably, Tianjin Benefo Tejing Electric's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Tianjin Benefo Tejing Electric's true underlying earnings power is actually less than its statutory profit. But at least holders can take some solace from the 8.0% per annum growth in EPS for the last three. 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. So while earnings quality is important, it's equally important to consider the risks facing Tianjin Benefo Tejing Electric at this point in time. At Simply Wall St, we found 1 warning sign for Tianjin Benefo Tejing Electric and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Tianjin Benefo Tejing Electric'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 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.