We Think You Can Look Beyond Anhui Huilong Agricultural Means of ProductionLtd's (SZSE:002556) Lackluster Earnings

Anhui Huilong Agricultural Means of Production Co.,Ltd.'s (SZSE:002556) stock was strong despite it releasing a soft earnings report last week. We think that investors might be looking at some positive factors beyond the earnings numbers.

Check out our latest analysis for Anhui Huilong Agricultural Means of ProductionLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Anhui Huilong Agricultural Means of ProductionLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥14m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. Anhui Huilong Agricultural Means of ProductionLtd took a rather significant hit from unusual items in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Anhui Huilong Agricultural Means of ProductionLtd.

Our Take On Anhui Huilong Agricultural Means of ProductionLtd's Profit Performance

As we mentioned previously, the Anhui Huilong Agricultural Means of ProductionLtd's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Anhui Huilong Agricultural Means of ProductionLtd's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back 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. 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. To help with this, we've discovered 3 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Anhui Huilong Agricultural Means of ProductionLtd.

This note has only looked at a single factor that sheds light on the nature of Anhui Huilong Agricultural Means of ProductionLtd'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. 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.