The market seemed underwhelmed by last week's earnings announcement from Jiangxi Copper Company Limited (HKG:358) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.
We've discovered 1 warning sign about Jiangxi Copper. View them for free.
How Do Unusual Items Influence Profit?
For anyone who wants to understand Jiangxi Copper's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥2.0b 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Jiangxi Copper to produce a higher profit next year, all else being equal.
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 Jiangxi Copper's Profit Performance
Unusual items (expenses) detracted from Jiangxi Copper's earnings over the last year, but we might see an improvement next year. Because of this, we think Jiangxi Copper's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 15% 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. If you want to do dive deeper into Jiangxi Copper, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Jiangxi Copper you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of Jiangxi Copper'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. 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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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.