Shareholders Will Be Pleased With The Quality of Suzhou Longjie Special Fiber's (SHSE:603332) Earnings

Suzhou Longjie Special Fiber Co., Ltd. (SHSE:603332) recently posted some strong earnings, and the market responded positively. We have done some analysis, and we found several positive factors beyond the profit numbers.

View our latest analysis for Suzhou Longjie Special Fiber

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Suzhou Longjie Special Fiber's profit was reduced by CN¥1.7m, 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 that's hardly a surprise given these line items are considered unusual. Suzhou Longjie Special Fiber took a rather significant hit from unusual items in the year to December 2023. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Suzhou Longjie Special Fiber.

Our Take On Suzhou Longjie Special Fiber's Profit Performance

As we discussed above, we think the significant unusual expense will make Suzhou Longjie Special Fiber's statutory profit lower than it would otherwise have been. Because of this, we think Suzhou Longjie Special Fiber's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And one can definitely find a positive in the fact that it made a profit this year, despite losing money 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To that end, you should learn about the 2 warning signs we've spotted with Suzhou Longjie Special Fiber (including 1 which is significant).

Today we've zoomed in on a single data point to better understand the nature of Suzhou Longjie Special Fiber's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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.