Statutory Profit Doesn't Reflect How Good Wuxi Hodgen Technology's (SZSE:300279) Earnings Are

When companies post strong earnings, the stock generally performs well, just like Wuxi Hodgen Technology Co., Ltd.'s (SZSE:300279) stock has recently. Our analysis found some more factors that we think are good for shareholders.

Check out our latest analysis for Wuxi Hodgen Technology

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Wuxi Hodgen Technology's profit was reduced by CN¥33m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Wuxi Hodgen Technology 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 Wuxi Hodgen Technology.

Our Take On Wuxi Hodgen Technology's Profit Performance

Unusual items (expenses) detracted from Wuxi Hodgen Technology's earnings over the last year, but we might see an improvement next year. Because of this, we think Wuxi Hodgen Technology's earnings potential is at least as good as it seems, and maybe even better! And one can definitely find a positive in the fact that it made a profit this year, despite losing money 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 Wuxi Hodgen Technology as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Wuxi Hodgen Technology you should know about.

Today we've zoomed in on a single data point to better understand the nature of Wuxi Hodgen Technology'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. 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 that insiders are buying 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.