ZYF Lopsking Aluminum (SZSE:002333) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

ZYF Lopsking Aluminum Co., Ltd. (SZSE:002333) announced strong profits, but the stock was stagnant. Our analysis suggests that shareholders have noticed something concerning in the numbers.

View our latest analysis for ZYF Lopsking Aluminum

The Impact Of Unusual Items On Profit

Importantly, our data indicates that ZYF Lopsking Aluminum's profit received a boost of CN¥11m 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. 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. ZYF Lopsking Aluminum had a rather significant contribution from unusual items relative to its profit to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of ZYF Lopsking Aluminum.

Our Take On ZYF Lopsking Aluminum's Profit Performance

As we discussed above, we think the significant positive unusual item makes ZYF Lopsking Aluminum's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that ZYF Lopsking Aluminum's underlying earnings power is lower than its statutory profit. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 2 warning signs for ZYF Lopsking Aluminum and you'll want to know about these.

Today we've zoomed in on a single data point to better understand the nature of ZYF Lopsking Aluminum'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. 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.