Guangzhou Tinci Materials Technology's (SZSE:002709) Shareholders Have More To Worry About Than Only Soft Earnings

The market rallied behind Guangzhou Tinci Materials Technology Co., Ltd.'s (SZSE:002709) stock, leading do a rise in the share price after its recent weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

Check out our latest analysis for Guangzhou Tinci Materials Technology

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Guangzhou Tinci Materials Technology's profit received a boost of CN¥119m in unusual items, over the last year. 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 Guangzhou Tinci Materials Technology 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 Guangzhou Tinci Materials Technology's Profit Performance

Arguably, Guangzhou Tinci Materials Technology's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Guangzhou Tinci Materials Technology's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. If you'd like to know more about Guangzhou Tinci Materials Technology as a business, it's important to be aware of any risks it's facing. For example - Guangzhou Tinci Materials Technology has 2 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Guangzhou Tinci Materials Technology'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 with significant insider holdings 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.