Stock Analysis

The Strong Earnings Posted By Jiangsu NanFang PrecisionLtd (SZSE:002553) Are A Good Indication Of The Strength Of The Business

SZSE:002553
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Jiangsu NanFang Precision Co.,Ltd. (SZSE:002553) just reported healthy earnings but the stock price didn't move much. Our analysis suggests that investors might be missing some promising details.

See our latest analysis for Jiangsu NanFang PrecisionLtd

earnings-and-revenue-history
SZSE:002553 Earnings and Revenue History May 7th 2024

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jiangsu NanFang PrecisionLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥76m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. In the twelve months to March 2024, Jiangsu NanFang PrecisionLtd had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jiangsu NanFang PrecisionLtd.

Our Take On Jiangsu NanFang PrecisionLtd's Profit Performance

As we mentioned previously, the Jiangsu NanFang PrecisionLtd's profit was hampered by unusual items in the last year. Because of this, we think Jiangsu NanFang PrecisionLtd's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Furthermore, it has done a great job growing EPS over the last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 4 warning signs for Jiangsu NanFang PrecisionLtd you should be mindful of and 1 of them makes us a bit uncomfortable.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu NanFang PrecisionLtd'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.

Valuation is complex, but we're helping make it simple.

Find out whether Jiangsu NanFang PrecisionLtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.