Why HARBIN GLORIA PHARMACEUTICALS' (SZSE:002437) Earnings Are Better Than They Seem

The market seemed underwhelmed by last week's earnings announcement from HARBIN GLORIA PHARMACEUTICALS Co., LTD (SZSE:002437) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

View our latest analysis for HARBIN GLORIA PHARMACEUTICALS

The Impact Of Unusual Items On Profit

Importantly, our data indicates that HARBIN GLORIA PHARMACEUTICALS' profit was reduced by CN¥42m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If HARBIN GLORIA PHARMACEUTICALS doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of HARBIN GLORIA PHARMACEUTICALS.

Our Take On HARBIN GLORIA PHARMACEUTICALS' Profit Performance

Because unusual items detracted from HARBIN GLORIA PHARMACEUTICALS' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think HARBIN GLORIA PHARMACEUTICALS' earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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. In terms of investment risks, we've identified 1 warning sign with HARBIN GLORIA PHARMACEUTICALS, and understanding it should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of HARBIN GLORIA PHARMACEUTICALS' profit. But there are plenty of other ways to inform your opinion of a company. 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.