Solid Earnings May Not Tell The Whole Story For Beijing AriTime Intelligent Control (SHSE:600560)

Beijing AriTime Intelligent Control Co., Ltd.'s (SHSE:600560) healthy profit numbers didn't contain any surprises for investors. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

See our latest analysis for Beijing AriTime Intelligent Control

The Impact Of Unusual Items On Profit

For anyone who wants to understand Beijing AriTime Intelligent Control's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥3.9m worth of 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If Beijing AriTime Intelligent Control 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 Beijing AriTime Intelligent Control.

Our Take On Beijing AriTime Intelligent Control's Profit Performance

Arguably, Beijing AriTime Intelligent Control's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Beijing AriTime Intelligent Control's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 6.5% 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. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. If you're interested we have a graphic representation of Beijing AriTime Intelligent Control's balance sheet.

This note has only looked at a single factor that sheds light on the nature of Beijing AriTime Intelligent Control'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. 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.