Solid Earnings May Not Tell The Whole Story For Angel Yeast (SHSE:600298)

The market shrugged off Angel Yeast Co., Ltd's (SHSE:600298) solid earnings report. We think that investors might be worried about some concerning underlying factors.

Check out our latest analysis for Angel Yeast

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Angel Yeast's profit received a boost of CN¥192m 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. Which is hardly surprising, given the name. If Angel Yeast doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Angel Yeast's Profit Performance

We'd posit that Angel Yeast's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Angel Yeast's true underlying earnings power is actually less than its statutory profit. 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 Angel Yeast as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Angel Yeast you should know about.

This note has only looked at a single factor that sheds light on the nature of Angel Yeast'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.