Academy of Environmental Planning and DesignLtd. Nanjing University's (SZSE:300864) Earnings Are Weaker Than They Seem

Investors were disappointed with Academy of Environmental Planning and Design, Co.,Ltd. Nanjing University's (SZSE:300864) earnings, despite the strong profit numbers. We think that the market might be paying attention to some underlying factors that they find to be concerning.

See our latest analysis for Academy of Environmental Planning and DesignLtd. Nanjing University

The Impact Of Unusual Items On Profit

For anyone who wants to understand Academy of Environmental Planning and DesignLtd. Nanjing University's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥22m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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. Which is hardly surprising, given the name. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Academy of Environmental Planning and DesignLtd. Nanjing University.

Our Take On Academy of Environmental Planning and DesignLtd. Nanjing University's Profit Performance

Arguably, Academy of Environmental Planning and DesignLtd. Nanjing University's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Academy of Environmental Planning and DesignLtd. Nanjing University's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 54% per annum growth in EPS for the last three. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 1 warning sign for Academy of Environmental Planning and DesignLtd. Nanjing University you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Academy of Environmental Planning and DesignLtd. Nanjing University'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.