There May Be Some Bright Spots In Zhejiang Huahai Pharmaceutical's (SHSE:600521) Earnings

Zhejiang Huahai Pharmaceutical Co., Ltd.'s (SHSE:600521) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for Zhejiang Huahai Pharmaceutical

The Impact Of Unusual Items On Profit

To properly understand Zhejiang Huahai Pharmaceutical's profit results, we need to consider the CN¥150m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Zhejiang Huahai Pharmaceutical doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 Zhejiang Huahai Pharmaceutical's Profit Performance

Because unusual items detracted from Zhejiang Huahai Pharmaceutical's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Zhejiang Huahai Pharmaceutical's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Zhejiang Huahai Pharmaceutical, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Zhejiang Huahai Pharmaceutical and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Huahai Pharmaceutical'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.