Jiangsu Nata Opto-electronic Material's (SZSE:300346) Anemic Earnings Might Be Worse Than You Think

Despite Jiangsu Nata Opto-electronic Material Co., Ltd.'s (SZSE:300346) recent earnings report having lackluster headline numbers, the market responded positively. We think that shareholders might be missing some concerning factors that our analysis found.

View our latest analysis for Jiangsu Nata Opto-electronic Material

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Jiangsu Nata Opto-electronic Material's profit received a boost of CN¥135m 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. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. Jiangsu Nata Opto-electronic Material had a rather significant contribution from unusual items relative to its profit to September 2023. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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 Nata Opto-electronic Material's Profit Performance

As previously mentioned, Jiangsu Nata Opto-electronic Material's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Jiangsu Nata Opto-electronic Material's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the good news is that its EPS growth over the last three years has been very impressive. 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 Jiangsu Nata Opto-electronic Material as a business, it's important to be aware of any risks it's facing. For example - Jiangsu Nata Opto-electronic Material has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Jiangsu Nata Opto-electronic Material's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.