Investors signalled that they were pleased with MYS Group Co., Ltd.'s (SZSE:002303) most recent earnings report. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.
Check out our latest analysis for MYS Group
How Do Unusual Items Influence Profit?
For anyone who wants to understand MYS Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥37m 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect MYS Group 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 MYS Group.
Our Take On MYS Group's Profit Performance
Because unusual items detracted from MYS Group's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think MYS Group's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 21% annually, 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for MYS Group (of which 1 is a bit unpleasant!) you should know about.
Today we've zoomed in on a single data point to better understand the nature of MYS Group'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.
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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.
About SZSE:002303
MYS Group
Develops, produces, and sells packaging products in China and internationally.
Excellent balance sheet, good value and pays a dividend.
