Guangxi Oriental Intelligent Manufacturing Technology's (SZSE:002175) Anemic Earnings Might Be Worse Than You Think

Despite Guangxi Oriental Intelligent Manufacturing Technology Co., Ltd.'s (SZSE:002175) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Guangxi Oriental Intelligent Manufacturing Technology.

Check out our latest analysis for Guangxi Oriental Intelligent Manufacturing Technology

How Do Unusual Items Influence Profit?

For anyone who wants to understand Guangxi Oriental Intelligent Manufacturing Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥4.6m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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, after all, that's exactly what the accounting terminology implies. If Guangxi Oriental Intelligent Manufacturing Technology 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 Guangxi Oriental Intelligent Manufacturing Technology.

Our Take On Guangxi Oriental Intelligent Manufacturing Technology's Profit Performance

Arguably, Guangxi Oriental Intelligent Manufacturing Technology's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Guangxi Oriental Intelligent Manufacturing Technology's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 1 warning sign for Guangxi Oriental Intelligent Manufacturing Technology and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Guangxi Oriental Intelligent Manufacturing 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.