Why Ningbo Tianyi Medical Appliance's (SZSE:301097) Shaky Earnings Are Just The Beginning Of Its Problems

Investors were disappointed by Ningbo Tianyi Medical Appliance Co., Ltd.'s (SZSE:301097 ) latest earnings release. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Ningbo Tianyi Medical Appliance

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Ningbo Tianyi Medical Appliance's profit received a boost of CN¥6.0m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Ningbo Tianyi Medical Appliance's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ningbo Tianyi Medical Appliance.

Our Take On Ningbo Tianyi Medical Appliance's Profit Performance

As previously mentioned, Ningbo Tianyi Medical Appliance's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Ningbo Tianyi Medical Appliance's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. In further bad news, its earnings per share decreased in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 4 warning signs for Ningbo Tianyi Medical Appliance (2 are potentially serious) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Ningbo Tianyi Medical Appliance'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 with high insider ownership.

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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.