Jiangsu Changbao SteeltubeLtd's (SZSE:002478) Earnings Are Of Questionable Quality

Despite posting some strong earnings, the market for Jiangsu Changbao Steeltube Co.,Ltd's (SZSE:002478) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

Check out our latest analysis for Jiangsu Changbao SteeltubeLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jiangsu Changbao SteeltubeLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥60m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. If Jiangsu Changbao SteeltubeLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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 Jiangsu Changbao SteeltubeLtd's Profit Performance

Arguably, Jiangsu Changbao SteeltubeLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Jiangsu Changbao SteeltubeLtd's true underlying earnings power is actually less than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Jiangsu Changbao SteeltubeLtd has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu Changbao SteeltubeLtd'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. 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.