Earnings Troubles May Signal Larger Issues for Juneyao Grand Healthy DrinksCo.Ltd (SHSE:605388) Shareholders

Investors were disappointed by Juneyao Grand Healthy DrinksCo.,Ltd.'s (SHSE:605388 ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

Check out our latest analysis for Juneyao Grand Healthy DrinksCo.Ltd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Juneyao Grand Healthy DrinksCo.Ltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥45m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Juneyao Grand Healthy DrinksCo.Ltd's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Juneyao Grand Healthy DrinksCo.Ltd.

Our Take On Juneyao Grand Healthy DrinksCo.Ltd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Juneyao Grand Healthy DrinksCo.Ltd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Juneyao Grand Healthy DrinksCo.Ltd's underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. If you want to do dive deeper into Juneyao Grand Healthy DrinksCo.Ltd, you'd also look into what risks it is currently facing. To help with this, we've discovered 4 warning signs (2 make us uncomfortable!) that you ought to be aware of before buying any shares in Juneyao Grand Healthy DrinksCo.Ltd.

This note has only looked at a single factor that sheds light on the nature of Juneyao Grand Healthy DrinksCo.Ltd'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 with high insider ownership.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.