Stock Analysis

Some Investors May Be Willing To Look Past JBM (Healthcare)'s (HKG:2161) Soft Earnings

SEHK:2161
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Shareholders appeared unconcerned with JBM (Healthcare) Limited's (HKG:2161) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for JBM (Healthcare)

earnings-and-revenue-history
SEHK:2161 Earnings and Revenue History August 3rd 2021

How Do Unusual Items Influence Profit?

For anyone who wants to understand JBM (Healthcare)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by HK$22m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. If JBM (Healthcare) 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 JBM (Healthcare).

Our Take On JBM (Healthcare)'s Profit Performance

Because unusual items detracted from JBM (Healthcare)'s earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that JBM (Healthcare)'s statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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. If you'd like to know more about JBM (Healthcare) as a business, it's important to be aware of any risks it's facing. For example - JBM (Healthcare) has 3 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of JBM (Healthcare)'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. 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.
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