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Statutory Profit Doesn't Reflect How Good JTEKT India's (NSE:JTEKTINDIA) Earnings Are
Even though JTEKT India Limited's (NSE:JTEKTINDIA) recent earnings release was robust, the market didn't seem to notice. Investors are probably missing some underlying factors which are encouraging for the future of the company.
Check out our latest analysis for JTEKT India
How Do Unusual Items Influence Profit?
For anyone who wants to understand JTEKT India's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₹68m 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. 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 JTEKT India doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On JTEKT India's Profit Performance
Unusual items (expenses) detracted from JTEKT India's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that JTEKT India's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate 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. So while earnings quality is important, it's equally important to consider the risks facing JTEKT India at this point in time. For example - JTEKT India has 1 warning sign we think you should be aware of.
This note has only looked at a single factor that sheds light on the nature of JTEKT India'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 that insiders are buying.
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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.
About NSEI:JTEKTINDIA
JTEKT India
Manufactures and sells steering systems and auto components for the passenger car and utility vehicle manufacturers in the automobile sector in India.
Flawless balance sheet with questionable track record.