We Think Raymond Industrial's (HKG:229) Profit Is Only A Baseline For What They Can Achieve

When companies post strong earnings, the stock generally performs well, just like Raymond Industrial Limited's (HKG:229) stock has recently. Our analysis found some more factors that we think are good for shareholders.

Check out our latest analysis for Raymond Industrial

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Raymond Industrial's profit was reduced by HK$23m, 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. Assuming those unusual expenses don't come up again, we'd therefore expect Raymond Industrial 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 Raymond Industrial.

Our Take On Raymond Industrial's Profit Performance

Unusual items (expenses) detracted from Raymond Industrial's earnings over the last year, but we might see an improvement next year. Because of this, we think Raymond Industrial's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 28% 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Raymond Industrial, and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Raymond Industrial'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.