Jiangnan Yifan Motor Co.,Ltd's (SZSE:301023) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Jiangnan Yifan MotorLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥5.8m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Jiangnan Yifan MotorLtd 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 Jiangnan Yifan MotorLtd.

Our Take On Jiangnan Yifan MotorLtd's Profit Performance

Unusual items (expenses) detracted from Jiangnan Yifan MotorLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Jiangnan Yifan MotorLtd's earnings potential is at least as good as it seems, and maybe even better! 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 want to do dive deeper into Jiangnan Yifan MotorLtd, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 4 warning signs for Jiangnan Yifan MotorLtd (of which 3 are concerning!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Jiangnan Yifan MotorLtd'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. 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.