Solid Earnings Reflect Jiangsu Yawei Machine Tool's (SZSE:002559) Strength As A Business

Even though Jiangsu Yawei Machine Tool Co., Ltd. (SZSE:002559 ) posted strong earnings, investors appeared to be underwhelmed. We did some digging and actually think they are being unnecessarily pessimistic.

View our latest analysis for Jiangsu Yawei Machine Tool

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jiangsu Yawei Machine Tool's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥29m 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, after all, that's exactly what the accounting terminology implies. Jiangsu Yawei Machine Tool took a rather significant hit from unusual items in the year to December 2023. All else being equal, this would likely have the effect of making the statutory profit look worse than its 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 Jiangsu Yawei Machine Tool's Profit Performance

As we discussed above, we think the significant unusual expense will make Jiangsu Yawei Machine Tool's statutory profit lower than it would otherwise have been. Because of this, we think Jiangsu Yawei Machine Tool's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And on top of that, its earnings per share have grown at an extremely impressive rate over the 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. If you'd like to know more about Jiangsu Yawei Machine Tool as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Jiangsu Yawei Machine Tool you should know about.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu Yawei Machine Tool'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.