Statutory Profit Doesn't Reflect How Good Wuhan Zhongyuan Huadian Science & TechnologyLtd's (SZSE:300018) Earnings Are

Wuhan Zhongyuan Huadian Science & Technology Co.,Ltd.'s (SZSE:300018) strong earnings report was rewarded with a positive stock price move. We did some digging and found some further encouraging factors that investors will like.

Check out our latest analysis for Wuhan Zhongyuan Huadian Science & TechnologyLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Wuhan Zhongyuan Huadian Science & TechnologyLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥11m 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Wuhan Zhongyuan Huadian Science & TechnologyLtd 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 Wuhan Zhongyuan Huadian Science & TechnologyLtd.

Our Take On Wuhan Zhongyuan Huadian Science & TechnologyLtd's Profit Performance

Because unusual items detracted from Wuhan Zhongyuan Huadian Science & TechnologyLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Wuhan Zhongyuan Huadian Science & TechnologyLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 62% in the last year. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 1 warning sign for Wuhan Zhongyuan Huadian Science & TechnologyLtd and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Wuhan Zhongyuan Huadian Science & TechnologyLtd'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.