Investors signalled that they were pleased with Jiangsu AMER New Material Co., Ltd.'s (SZSE:002201) most recent earnings report. According to our analysis of the report, the strong headline profit numbers are supported by strong earnings fundamentals.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Jiangsu AMER New Material's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥42m 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 Jiangsu AMER New Material 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 Jiangsu AMER New Material.

Our Take On Jiangsu AMER New Material's Profit Performance

Unusual items (expenses) detracted from Jiangsu AMER New Material's earnings over the last year, but we might see an improvement next year. Because of this, we think Jiangsu AMER New Material's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 20% annually, over the last three years. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To help with this, we've discovered 2 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Jiangsu AMER New Material.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu AMER New Material's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.