Solid Earnings Reflect Tjk Machinery (Tianjin)'s (SZSE:300823) Strength As A Business

Tjk Machinery (Tianjin) Co., Ltd. (SZSE:300823) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

View our latest analysis for Tjk Machinery (Tianjin)

The Impact Of Unusual Items On Profit

To properly understand Tjk Machinery (Tianjin)'s profit results, we need to consider the CN¥12m expense attributed 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 Tjk Machinery (Tianjin) 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 Tjk Machinery (Tianjin).

Our Take On Tjk Machinery (Tianjin)'s Profit Performance

Because unusual items detracted from Tjk Machinery (Tianjin)'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 Tjk Machinery (Tianjin)'s statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 54% 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 3 warning signs for Tjk Machinery (Tianjin) and you'll want to know about these.

Today we've zoomed in on a single data point to better understand the nature of Tjk Machinery (Tianjin)'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. 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.