We Think That There Are More Issues For Jiangsu Wujin Stainless Steel Pipe GroupLTD (SHSE:603878) Than Just Sluggish Earnings - Simply Wall St News

Stock Analysis

The market wasn't impressed with the soft earnings from Jiangsu Wujin Stainless Steel Pipe Group CO.,LTD. (SHSE:603878) recently. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Jiangsu Wujin Stainless Steel Pipe GroupLTD

For anyone who wants to understand Jiangsu Wujin Stainless Steel Pipe GroupLTD's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥32m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Jiangsu Wujin Stainless Steel Pipe GroupLTD doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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.

Arguably, Jiangsu Wujin Stainless Steel Pipe GroupLTD's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Jiangsu Wujin Stainless Steel Pipe GroupLTD's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 33% per annum growth in EPS for the last three. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 1 warning sign with Jiangsu Wujin Stainless Steel Pipe GroupLTD, and understanding it should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Jiangsu Wujin Stainless Steel Pipe GroupLTD'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 with significant insider holdings to be useful.

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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.

Jiangsu Wujin Stainless Steel Pipe Group CO.,LTD.