Weak Statutory Earnings May Not Tell The Whole Story For Hunan Yuneng New Energy Battery MaterialLtd (SZSE:301358)

Hunan Yuneng New Energy Battery Material Co.,Ltd.'s (SZSE:301358) stock showed strength, with investors undeterred by its weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

Check out our latest analysis for Hunan Yuneng New Energy Battery MaterialLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hunan Yuneng New Energy Battery MaterialLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥185m 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 crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Hunan Yuneng New Energy Battery MaterialLtd's Profit Performance

Arguably, Hunan Yuneng New Energy Battery MaterialLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Hunan Yuneng New Energy Battery MaterialLtd's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Hunan Yuneng New Energy Battery MaterialLtd has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Hunan Yuneng New Energy Battery MaterialLtd'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 that insiders are buying 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.