We Like The Quality Of Shanghai Yaoji Technology's (SZSE:002605) Earnings

Shanghai Yaoji Technology Co., Ltd.'s (SZSE:002605) solid earnings announcement recently didn't do much to the stock price. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

See our latest analysis for Shanghai Yaoji Technology

The Impact Of Unusual Items On Profit

For anyone who wants to understand Shanghai Yaoji Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥74m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Shanghai Yaoji Technology to produce a higher profit next year, all else being equal.

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 Shanghai Yaoji Technology's Profit Performance

Unusual items (expenses) detracted from Shanghai Yaoji Technology's earnings over the last year, but we might see an improvement next year. Because of this, we think Shanghai Yaoji Technology's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 12% over the last twelve months. 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. If you want to do dive deeper into Shanghai Yaoji Technology, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Shanghai Yaoji Technology.

Today we've zoomed in on a single data point to better understand the nature of Shanghai Yaoji Technology's profit. But there are plenty of other ways to inform your opinion of a company. 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.