Yunnan Botanee Bio-Technology GroupLTD's (SZSE:300957) Sluggish Earnings Might Be Just The Beginning Of Its Problems

The subdued market reaction suggests that Yunnan Botanee Bio-Technology Group Co.LTD's (SZSE:300957) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Yunnan Botanee Bio-Technology GroupLTD

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Yunnan Botanee Bio-Technology GroupLTD's profit received a boost of CN¥93m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Yunnan Botanee Bio-Technology GroupLTD's Profit Performance

We'd posit that Yunnan Botanee Bio-Technology GroupLTD's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Yunnan Botanee Bio-Technology GroupLTD's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 16% over the last three years. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Yunnan Botanee Bio-Technology GroupLTD you should know about.

Today we've zoomed in on a single data point to better understand the nature of Yunnan Botanee Bio-Technology GroupLTD'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.

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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.