Anhui Sierte Fertilizer industry company's (SZSE:002538) Weak Earnings May Only Reveal A Part Of The Whole Picture

Anhui Sierte Fertilizer industry LTD. ,company's (SZSE:002538) stock showed strength, with investors undeterred by its weak earnings report. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Anhui Sierte Fertilizer industry company.

Check out our latest analysis for Anhui Sierte Fertilizer industry company

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Anhui Sierte Fertilizer industry company's profit received a boost of CN¥24m 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. 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).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Anhui Sierte Fertilizer industry company.

Our Take On Anhui Sierte Fertilizer industry company's Profit Performance

We'd posit that Anhui Sierte Fertilizer industry company'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 Sierte Fertilizer industry company's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 2 warning signs for Anhui Sierte Fertilizer industry company (of which 1 is potentially serious!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Anhui Sierte Fertilizer industry company'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.