Some May Be Optimistic About Zangge Mining's (SZSE:000408) Earnings

Shareholders appeared unconcerned with Zangge Mining Company Limited's (SZSE:000408) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

Check out our latest analysis for Zangge Mining

The Impact Of Unusual Items On Profit

For anyone who wants to understand Zangge Mining's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥337m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Zangge Mining to produce a higher profit next year, all else being equal.

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 Zangge Mining's Profit Performance

Unusual items (expenses) detracted from Zangge Mining's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Zangge Mining's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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 Zangge Mining, you'd also look into what risks it is currently facing. For example - Zangge Mining has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Zangge Mining'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. 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.