There May Be Reason For Hope In Winner Medical's (SZSE:300888) Disappointing Earnings

Investors were disappointed with the weak earnings posted by Winner Medical Co., Ltd. (SZSE:300888 ). While the headline numbers were soft, we believe that investors might be missing some encouraging factors.

View our latest analysis for Winner Medical

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Winner Medical's profit was reduced by CN¥57m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Winner Medical doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Winner Medical's Profit Performance

Because unusual items detracted from Winner Medical's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Winner Medical's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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. For example - Winner Medical has 2 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Winner Medical'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.