We Think That There Are More Issues For Youngy Health (SZSE:300247) Than Just Sluggish Earnings

Despite Youngy Health Co., Ltd.'s (SZSE:300247) recent earnings report having lackluster headline numbers, the market responded positively. While shareholders may be willing to overlook soft profit numbers, we believe that they should also be taking into account some other factors which may be cause for concern.

See our latest analysis for Youngy Health

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Youngy Health's profit received a boost of CN¥5.3m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Youngy Health.

Our Take On Youngy Health's Profit Performance

Arguably, Youngy Health's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Youngy Health's statutory profits are better than its underlying earnings power. Sadly, its EPS was down 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'd like to know more about Youngy Health as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Youngy Health, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Youngy Health'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. 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.