We Think You Can Look Beyond Chongqing YuXin Pingrui Electronic's (SZSE:301107) Lackluster Earnings

Chongqing YuXin Pingrui Electronic Co., Ltd.'s (SZSE:301107) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. However, we think the company is showing some signs that things are more promising than they seem.

See our latest analysis for Chongqing YuXin Pingrui Electronic

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Chongqing YuXin Pingrui Electronic's profit was reduced by CN¥4.8m, due to unusual items, over the last year. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Chongqing YuXin Pingrui Electronic 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 Chongqing YuXin Pingrui Electronic.

Our Take On Chongqing YuXin Pingrui Electronic's Profit Performance

Unusual items (expenses) detracted from Chongqing YuXin Pingrui Electronic's earnings over the last year, but we might see an improvement next year. Because of this, we think Chongqing YuXin Pingrui Electronic's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. So while earnings quality is important, it's equally important to consider the risks facing Chongqing YuXin Pingrui Electronic at this point in time. To help with this, we've discovered 2 warning signs (1 shouldn't be ignored!) that you ought to be aware of before buying any shares in Chongqing YuXin Pingrui Electronic.

Today we've zoomed in on a single data point to better understand the nature of Chongqing YuXin Pingrui Electronic'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.