Silvery Dragon Prestressed MaterialsLTD Tianjin's (SHSE:603969) Solid Profits Have Weak Fundamentals

Silvery Dragon Prestressed Materials Co.,LTD Tianjin's (SHSE:603969) stock was strong after they recently reported robust earnings. However, we think that shareholders may be missing some concerning details in the numbers.

See our latest analysis for Silvery Dragon Prestressed MaterialsLTD Tianjin

How Do Unusual Items Influence Profit?

For anyone who wants to understand Silvery Dragon Prestressed MaterialsLTD Tianjin's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥23m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Silvery Dragon Prestressed MaterialsLTD Tianjin doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Silvery Dragon Prestressed MaterialsLTD Tianjin.

Our Take On Silvery Dragon Prestressed MaterialsLTD Tianjin's Profit Performance

We'd posit that Silvery Dragon Prestressed MaterialsLTD Tianjin's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Silvery Dragon Prestressed MaterialsLTD Tianjin's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 25% 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. 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. Be aware that Silvery Dragon Prestressed MaterialsLTD Tianjin is showing 2 warning signs in our investment analysis and 1 of those is a bit unpleasant...

Today we've zoomed in on a single data point to better understand the nature of Silvery Dragon Prestressed MaterialsLTD Tianjin'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 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.