There May Be Reason For Hope In Wuxi Paike New Materials TechnologyLtd's (SHSE:605123) Disappointing Earnings

Wuxi Paike New Materials Technology Co.,Ltd.'s (SHSE:605123) earnings announcement last week didn't impress shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

See our latest analysis for Wuxi Paike New Materials TechnologyLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Wuxi Paike New Materials TechnologyLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥54m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Wuxi Paike New Materials TechnologyLtd 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 Wuxi Paike New Materials TechnologyLtd's Profit Performance

Unusual items (expenses) detracted from Wuxi Paike New Materials TechnologyLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Wuxi Paike New Materials TechnologyLtd's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 62% annually, over the last three years. 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. Case in point: We've spotted 1 warning sign for Wuxi Paike New Materials TechnologyLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Wuxi Paike New Materials TechnologyLtd'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 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.