Concerns Surrounding JDM JingDaMachine (Ningbo)Ltd's (SHSE:603088) Performance

JDM JingDaMachine (Ningbo) Co.Ltd's (SHSE:603088) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

View our latest analysis for JDM JingDaMachine (Ningbo)Ltd

How Do Unusual Items Influence Profit?

To properly understand JDM JingDaMachine (Ningbo)Ltd's profit results, we need to consider the CN¥14m 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. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. 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).

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 JDM JingDaMachine (Ningbo)Ltd's Profit Performance

Arguably, JDM JingDaMachine (Ningbo)Ltd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that JDM JingDaMachine (Ningbo)Ltd's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into JDM JingDaMachine (Ningbo)Ltd, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for JDM JingDaMachine (Ningbo)Ltd you should know about.

Today we've zoomed in on a single data point to better understand the nature of JDM JingDaMachine (Ningbo)Ltd'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 with high insider ownership.

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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.