Shanghai Yaohua Pilkington Glass Group's (SHSE:600819) Earnings Are Of Questionable Quality

Despite posting some strong earnings, the market for Shanghai Yaohua Pilkington Glass Group Co., Ltd.'s (SHSE:600819) stock hasn't moved much. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

Check out our latest analysis for Shanghai Yaohua Pilkington Glass Group

The Impact Of Unusual Items On Profit

To properly understand Shanghai Yaohua Pilkington Glass Group's profit results, we need to consider the CN¥7.5m gain attributed to unusual items. 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. If Shanghai Yaohua Pilkington Glass Group doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shanghai Yaohua Pilkington Glass Group.

Our Take On Shanghai Yaohua Pilkington Glass Group's Profit Performance

Arguably, Shanghai Yaohua Pilkington Glass Group's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shanghai Yaohua Pilkington Glass Group's statutory profits are better than its underlying earnings power. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Shanghai Yaohua Pilkington Glass Group has 1 warning sign and it would be unwise to ignore it.

This note has only looked at a single factor that sheds light on the nature of Shanghai Yaohua Pilkington Glass Group's profit. But there are plenty of other ways to inform your opinion of a company. 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 with significant insider holdings 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.