BGRIMM Technology (SHSE:600980) Is Posting Promising Earnings But The Good News Doesn’t Stop There

BGRIMM Technology Co., Ltd.'s (SHSE:600980) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

The Impact Of Unusual Items On Profit

For anyone who wants to understand BGRIMM Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥25m due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect BGRIMM Technology 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 BGRIMM Technology.

Our Take On BGRIMM Technology's Profit Performance

Unusual items (expenses) detracted from BGRIMM Technology's earnings over the last year, but we might see an improvement next year. Because of this, we think BGRIMM Technology's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 5.4% per year over the last three years. 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. While earnings are important, another area to consider is the balance sheet. If you're interested we have a graphic representation of BGRIMM Technology's balance sheet.

This note has only looked at a single factor that sheds light on the nature of BGRIMM Technology'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. 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.