Anhui Wanwei Updated High-Tech Material IndustryLtd's (SHSE:600063) Sluggish Earnings Might Be Just The Beginning Of Its Problems

A lackluster earnings announcement from Anhui Wanwei Updated High-Tech Material Industry Co.,Ltd (SHSE:600063) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Anhui Wanwei Updated High-Tech Material IndustryLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Anhui Wanwei Updated High-Tech Material IndustryLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥68m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. If Anhui Wanwei Updated High-Tech Material IndustryLtd 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 Anhui Wanwei Updated High-Tech Material IndustryLtd's Profit Performance

We'd posit that Anhui Wanwei Updated High-Tech Material IndustryLtd's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Anhui Wanwei Updated High-Tech Material IndustryLtd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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 while earnings quality is important, it's equally important to consider the risks facing Anhui Wanwei Updated High-Tech Material IndustryLtd at this point in time. In terms of investment risks, we've identified 3 warning signs with Anhui Wanwei Updated High-Tech Material IndustryLtd, and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Anhui Wanwei Updated High-Tech Material IndustryLtd'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. 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.