Weak Statutory Earnings May Not Tell The Whole Story For Shandong Homey Aquatic DevelopmentLtd (SHSE:600467)

Shandong Homey Aquatic Development Co.,Ltd.'s (SHSE:600467) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

View our latest analysis for Shandong Homey Aquatic DevelopmentLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shandong Homey Aquatic DevelopmentLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥19m worth of unusual items. 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'. If Shandong Homey Aquatic DevelopmentLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shandong Homey Aquatic DevelopmentLtd.

Our Take On Shandong Homey Aquatic DevelopmentLtd's Profit Performance

Arguably, Shandong Homey Aquatic DevelopmentLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shandong Homey Aquatic DevelopmentLtd's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Shandong Homey Aquatic DevelopmentLtd, you'd also look into what risks it is currently facing. For instance, we've identified 4 warning signs for Shandong Homey Aquatic DevelopmentLtd (2 are concerning) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Shandong Homey Aquatic DevelopmentLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 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.