A lackluster earnings announcement from Changjiang & Jinggong Steel Building (Group) Co., Ltd (SHSE:600496) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.
See our latest analysis for Changjiang & Jinggong Steel Building (Group)
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Changjiang & Jinggong Steel Building (Group)'s profit received a boost of CN¥83m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
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 Changjiang & Jinggong Steel Building (Group)'s Profit Performance
Arguably, Changjiang & Jinggong Steel Building (Group)'s statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Changjiang & Jinggong Steel Building (Group)'s true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 1 warning sign for Changjiang & Jinggong Steel Building (Group) you should know about.
Today we've zoomed in on a single data point to better understand the nature of Changjiang & Jinggong Steel Building (Group)'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.