Some May Be Optimistic About Jiangsu Hengshun Vinegar-IndustryLtd's (SHSE:600305) Earnings

Shareholders appeared unconcerned with Jiangsu Hengshun Vinegar-Industry Co.,Ltd's (SHSE:600305) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

See our latest analysis for Jiangsu Hengshun Vinegar-IndustryLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Jiangsu Hengshun Vinegar-IndustryLtd's profit was reduced by CN¥9.5m, 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. 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. If Jiangsu Hengshun Vinegar-IndustryLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Jiangsu Hengshun Vinegar-IndustryLtd's Profit Performance

Unusual items (expenses) detracted from Jiangsu Hengshun Vinegar-IndustryLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Jiangsu Hengshun Vinegar-IndustryLtd's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Our analysis shows 2 warning signs for Jiangsu Hengshun Vinegar-IndustryLtd (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.

This note has only looked at a single factor that sheds light on the nature of Jiangsu Hengshun Vinegar-IndustryLtd'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.