We Like The Quality Of Hubei Jiuzhiyang Infrared System's (SZSE:300516) Earnings

Investors signalled that they were pleased with Hubei Jiuzhiyang Infrared System Co., Ltd's (SZSE:300516) most recent earnings report. According to our analysis of the report, the strong headline profit numbers are supported by strong earnings fundamentals.

View our latest analysis for Hubei Jiuzhiyang Infrared System

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Hubei Jiuzhiyang Infrared System's profit was reduced by CN¥20m, 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Hubei Jiuzhiyang Infrared System to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Hubei Jiuzhiyang Infrared System.

Our Take On Hubei Jiuzhiyang Infrared System's Profit Performance

Unusual items (expenses) detracted from Hubei Jiuzhiyang Infrared System's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Hubei Jiuzhiyang Infrared System's statutory profit actually understates its earnings potential! And the EPS is up 22% annually, over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Hubei Jiuzhiyang Infrared System as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Hubei Jiuzhiyang Infrared System.

Today we've zoomed in on a single data point to better understand the nature of Hubei Jiuzhiyang Infrared System'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 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.