Yuan Long Ping High-Tech Agriculture's (SZSE:000998) Strong Earnings Are Of Good Quality

Yuan Long Ping High-Tech Agriculture Co., Ltd. (SZSE:000998) just reported healthy earnings but the stock price didn't move much. We think that investors have missed some encouraging factors underlying the profit figures.

See our latest analysis for Yuan Long Ping High-Tech Agriculture

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Yuan Long Ping High-Tech Agriculture's profit was reduced by CN¥90m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If Yuan Long Ping High-Tech 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 Yuan Long Ping High-Tech Agriculture's Profit Performance

Unusual items (expenses) detracted from Yuan Long Ping High-Tech Agriculture's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Yuan Long Ping High-Tech Agriculture's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money 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 Yuan Long Ping High-Tech Agriculture, you'd also look into what risks it is currently facing. Our analysis shows 2 warning signs for Yuan Long Ping High-Tech Agriculture (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.

Today we've zoomed in on a single data point to better understand the nature of Yuan Long Ping High-Tech 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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.