We Think Jiangsu Xiuqiang Glasswork's (SZSE:300160) Solid Earnings Are Understated

The market seemed underwhelmed by the solid earnings posted by Jiangsu Xiuqiang Glasswork Co., Ltd. (SZSE:300160) recently. Our analysis suggests that there are some reasons for hope that investors should be aware of.

Check out our latest analysis for Jiangsu Xiuqiang Glasswork

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Jiangsu Xiuqiang Glasswork's profit was reduced by CN¥27m, 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. If Jiangsu Xiuqiang Glasswork 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 Jiangsu Xiuqiang Glasswork.

Our Take On Jiangsu Xiuqiang Glasswork's Profit Performance

Unusual items (expenses) detracted from Jiangsu Xiuqiang Glasswork's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Jiangsu Xiuqiang Glasswork's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 43% per year over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Jiangsu Xiuqiang Glasswork has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu Xiuqiang Glasswork'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. 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 with significant insider holdings to be useful.

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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.