There May Be Reason For Hope In Jiangsu Allfavor Intelligent Circuits TechnologyLtd's (SZSE:300964) Disappointing Earnings

Soft earnings didn't appear to concern Jiangsu Allfavor Intelligent Circuits Technology CO.,Ltd's (SZSE:300964) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

View our latest analysis for Jiangsu Allfavor Intelligent Circuits TechnologyLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Jiangsu Allfavor Intelligent Circuits TechnologyLtd's profit was reduced by CN¥1.3m, 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. In the twelve months to June 2024, Jiangsu Allfavor Intelligent Circuits TechnologyLtd had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jiangsu Allfavor Intelligent Circuits TechnologyLtd.

Our Take On Jiangsu Allfavor Intelligent Circuits TechnologyLtd's Profit Performance

As we discussed above, we think the significant unusual expense will make Jiangsu Allfavor Intelligent Circuits TechnologyLtd's statutory profit lower than it would otherwise have been. Because of this, we think Jiangsu Allfavor Intelligent Circuits TechnologyLtd's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Be aware that Jiangsu Allfavor Intelligent Circuits TechnologyLtd is showing 5 warning signs in our investment analysis and 3 of those are potentially serious...

This note has only looked at a single factor that sheds light on the nature of Jiangsu Allfavor Intelligent Circuits TechnologyLtd'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. 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.