WINBO-Dongjian Automotive Technology Co., Ltd.’s (SZSE:300978) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.
See our latest analysis for WINBO-Dongjian Automotive Technology
The Impact Of Unusual Items On Profit
Importantly, our data indicates that WINBO-Dongjian Automotive Technology’s profit was reduced by CN¥24m, due to unusual items, over the last year. 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 WINBO-Dongjian Automotive Technology 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 WINBO-Dongjian Automotive Technology.
Our Take On WINBO-Dongjian Automotive Technology’s Profit Performance
Unusual items (expenses) detracted from WINBO-Dongjian Automotive Technology’s earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that WINBO-Dongjian Automotive Technology’s statutory profit actually understates its earnings potential! And the EPS is up 38% 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. So while earnings quality is important, it’s equally important to consider the risks facing WINBO-Dongjian Automotive Technology at this point in time. To help with this, we’ve discovered 2 warning signs (1 can’t be ignored!) that you ought to be aware of before buying any shares in WINBO-Dongjian Automotive Technology.
Today we’ve zoomed in on a single data point to better understand the nature of WINBO-Dongjian Automotive Technology’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.
Valuation is complex, but we’re helping make it simple.
Find out whether WINBO-Dongjian Automotive Technology is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.