Some Investors May Be Willing To Look Past Zhejiang Yuejian Intelligent EquipmentLtd's (SHSE:603095) Soft Earnings

Investors were disappointed with the weak earnings posted by Zhejiang Yuejian Intelligent Equipment Co.,Ltd. (SHSE:603095 ). Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

See our latest analysis for Zhejiang Yuejian Intelligent EquipmentLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Zhejiang Yuejian Intelligent EquipmentLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥20m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. In the twelve months to December 2023, Zhejiang Yuejian Intelligent EquipmentLtd had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhejiang Yuejian Intelligent EquipmentLtd.

Our Take On Zhejiang Yuejian Intelligent EquipmentLtd's Profit Performance

As we mentioned previously, the Zhejiang Yuejian Intelligent EquipmentLtd's profit was hampered by unusual items in the last year. Because of this, we think Zhejiang Yuejian Intelligent EquipmentLtd's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 4 warning signs for Zhejiang Yuejian Intelligent EquipmentLtd you should be mindful of and 1 of them makes us a bit uncomfortable.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Yuejian Intelligent EquipmentLtd'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.