Statutory Profit Doesn't Reflect How Good Ningbo TechmationLtd's (SHSE:603015) Earnings Are

Ningbo Techmation Co.,Ltd. (SHSE:603015) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

See our latest analysis for Ningbo TechmationLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Ningbo TechmationLtd's profit was reduced by CN¥15m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Ningbo TechmationLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ningbo TechmationLtd.

Our Take On Ningbo TechmationLtd's Profit Performance

Unusual items (expenses) detracted from Ningbo TechmationLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Ningbo TechmationLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. 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. While earnings are important, another area to consider is the balance sheet. You can see our latest analysis on Ningbo TechmationLtd's balance sheet health here.

Today we've zoomed in on a single data point to better understand the nature of Ningbo TechmationLtd'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. 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.