Some May Be Optimistic About Anhui Tongyuan Environment Energy SavingLtd's (SHSE:688679) Earnings

Anhui Tongyuan Environment Energy Saving Co.,Ltd's (SHSE:688679) stock was strong despite it releasing a soft earnings report last week. We think that investors might be looking at some positive factors beyond the earnings numbers.

See our latest analysis for Anhui Tongyuan Environment Energy SavingLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Anhui Tongyuan Environment Energy SavingLtd's profit was reduced by CN¥15m, due to unusual items, over the last year. 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Anhui Tongyuan Environment Energy SavingLtd 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 Anhui Tongyuan Environment Energy SavingLtd.

Our Take On Anhui Tongyuan Environment Energy SavingLtd's Profit Performance

Unusual items (expenses) detracted from Anhui Tongyuan Environment Energy SavingLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Anhui Tongyuan Environment Energy SavingLtd's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Anhui Tongyuan Environment Energy SavingLtd at this point in time. Our analysis shows 5 warning signs for Anhui Tongyuan Environment Energy SavingLtd (1 is a bit unpleasant!) and we strongly recommend you look at these bad boys before investing.

Today we've zoomed in on a single data point to better understand the nature of Anhui Tongyuan Environment Energy SavingLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.