Bohai Leasing's (SZSE:000415) Earnings May Just Be The Starting Point

When companies post strong earnings, the stock generally performs well, just like Bohai Leasing Co., Ltd.'s (SZSE:000415) stock has recently. We did some digging and found some further encouraging factors that investors will like.

View our latest analysis for Bohai Leasing

The Impact Of Unusual Items On Profit

For anyone who wants to understand Bohai Leasing's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥1.5b due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Bohai Leasing to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Bohai Leasing.

Our Take On Bohai Leasing's Profit Performance

Because unusual items detracted from Bohai Leasing's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Bohai Leasing's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For instance, we've identified 2 warning signs for Bohai Leasing (1 is concerning) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of Bohai Leasing's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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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.