Qingdao Haier BiomedicalLtd's (SHSE:688139) Weak Earnings May Only Reveal A Part Of The Whole Picture

Last week's earnings announcement from Qingdao Haier Biomedical Co.,Ltd (SHSE:688139) was disappointing to investors, with a sluggish profit figure. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

Check out our latest analysis for Qingdao Haier BiomedicalLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Qingdao Haier BiomedicalLtd's profit received a boost of CN¥24m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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, after all, that's exactly what the accounting terminology implies. If Qingdao Haier BiomedicalLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current 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 Qingdao Haier BiomedicalLtd's Profit Performance

Arguably, Qingdao Haier BiomedicalLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Qingdao Haier BiomedicalLtd's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over 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. In terms of investment risks, we've identified 2 warning signs with Qingdao Haier BiomedicalLtd, and understanding them should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of Qingdao Haier BiomedicalLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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 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.