Weak Statutory Earnings May Not Tell The Whole Story For Guangdong Weide Information Technology CO.Ltd (SHSE:688171)

Guangdong Weide Information Technology CO,.Ltd.'s (SHSE:688171) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Guangdong Weide Information Technology CO.Ltd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Guangdong Weide Information Technology CO.Ltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥1.1m 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. 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 Guangdong Weide Information Technology CO.Ltd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Guangdong Weide Information Technology CO.Ltd.

Our Take On Guangdong Weide Information Technology CO.Ltd's Profit Performance

Arguably, Guangdong Weide Information Technology CO.Ltd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Guangdong Weide Information Technology CO.Ltd's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 2 warning signs for Guangdong Weide Information Technology CO.Ltd (1 doesn't sit too well with us!) and we strongly recommend you look at these before investing.

Today we've zoomed in on a single data point to better understand the nature of Guangdong Weide Information Technology CO.Ltd's profit. But there are plenty of other ways to inform your opinion of a company. 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 with high insider ownership.

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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.