Heilongjiang Agriculture's (SHSE:600598) Solid Earnings Have Been Accounted For Conservatively

Heilongjiang Agriculture Company Limited's (SHSE:600598) 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 Heilongjiang Agriculture

How Do Unusual Items Influence Profit?

To properly understand Heilongjiang Agriculture's profit results, we need to consider the CN¥110m expense attributed 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. If Heilongjiang Agriculture 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 Heilongjiang Agriculture's Profit Performance

Unusual items (expenses) detracted from Heilongjiang Agriculture's earnings over the last year, but we might see an improvement next year. Because of this, we think Heilongjiang Agriculture's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 7.4% per year over the last three years. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Heilongjiang Agriculture has 1 warning sign we think you should be aware of.

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