Nanjing Quanxin Cable Technology's (SZSE:300447) Anemic Earnings Might Be Worse Than You Think

The subdued market reaction suggests that Nanjing Quanxin Cable Technology Co., Ltd.'s (SZSE:300447) recent earnings didn't contain any surprises. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

Check out our latest analysis for Nanjing Quanxin Cable Technology

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Nanjing Quanxin Cable Technology's profit received a boost of CN¥8.8m 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. Which is hardly surprising, given the name. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Nanjing Quanxin Cable Technology.

Our Take On Nanjing Quanxin Cable Technology's Profit Performance

Arguably, Nanjing Quanxin Cable Technology's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Nanjing Quanxin Cable Technology's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 2 warning signs for Nanjing Quanxin Cable Technology and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Nanjing Quanxin Cable Technology'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 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.