HangZhou Nbond Nonwovens' (SHSE:603238) Solid Earnings Are Supported By Other Strong Factors

Even though HangZhou Nbond Nonwovens Co., Ltd.'s (SHSE:603238) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

Check out our latest analysis for HangZhou Nbond Nonwovens

How Do Unusual Items Influence Profit?

To properly understand HangZhou Nbond Nonwovens' profit results, we need to consider the CN¥16m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. If HangZhou Nbond Nonwovens doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of HangZhou Nbond Nonwovens.

Our Take On HangZhou Nbond Nonwovens' Profit Performance

Unusual items (expenses) detracted from HangZhou Nbond Nonwovens' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that HangZhou Nbond Nonwovens' statutory profit actually understates its earnings potential! Furthermore, it has done a great job growing EPS 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 HangZhou Nbond Nonwovens as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for HangZhou Nbond Nonwovens you should be mindful of and 1 of these makes us a bit uncomfortable.

Today we've zoomed in on a single data point to better understand the nature of HangZhou Nbond Nonwovens' 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.