Earnings Troubles May Signal Larger Issues for Wasu Media HoldingLtd (SZSE:000156) Shareholders

Investors were disappointed by Wasu Media Holding Co.,Ltd's (SZSE:000156 ) latest earnings release. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Wasu Media HoldingLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Wasu Media HoldingLtd's profit received a boost of CN¥39m 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. 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 Wasu Media HoldingLtd 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 Wasu Media HoldingLtd.

Our Take On Wasu Media HoldingLtd's Profit Performance

Arguably, Wasu Media HoldingLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Wasu Media HoldingLtd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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'd like to know more about Wasu Media HoldingLtd as a business, it's important to be aware of any risks it's facing. For example - Wasu Media HoldingLtd has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Wasu Media HoldingLtd'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. 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 that insiders are buying 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.