XTC New Energy Materials(Xiamen)Ltd's (SHSE:688778) Shareholders Have More To Worry About Than Only Soft Earnings

A lackluster earnings announcement from XTC New Energy Materials(Xiamen) Co.,Ltd. (SHSE:688778) last week didn't sink the stock price. 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 XTC New Energy Materials(Xiamen)Ltd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that XTC New Energy Materials(Xiamen)Ltd's profit received a boost of CN¥113m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If XTC New Energy Materials(Xiamen)Ltd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 XTC New Energy Materials(Xiamen)Ltd's Profit Performance

We'd posit that XTC New Energy Materials(Xiamen)Ltd'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 XTC New Energy Materials(Xiamen)Ltd's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 2 warning signs for XTC New Energy Materials(Xiamen)Ltd and you'll want to know about these.

This note has only looked at a single factor that sheds light on the nature of XTC New Energy Materials(Xiamen)Ltd'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.

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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.