Xiamen ITG GroupLtd's (SHSE:600755) Problems Go Beyond Weak Profit

The subdued market reaction suggests that Xiamen ITG Group Corp.,Ltd's (SHSE:600755) recent earnings didn't contain any surprises. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

View our latest analysis for Xiamen ITG GroupLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Xiamen ITG GroupLtd's profit received a boost of CN¥1.1b in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. Xiamen ITG GroupLtd had a rather significant contribution from unusual items relative to its profit to March 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Xiamen ITG GroupLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Xiamen ITG GroupLtd's earnings a poor guide to its underlying profitability. For this reason, we think that Xiamen ITG GroupLtd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. In further bad news, its earnings per share decreased in the last year. 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 Xiamen ITG GroupLtd, you'd also look into what risks it is currently facing. At Simply Wall St, we found 3 warning signs for Xiamen ITG GroupLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Xiamen ITG GroupLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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.

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

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.