Shijiazhuang Yiling Pharmaceutical's (SZSE:002603) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Investors were disappointed by Shijiazhuang Yiling Pharmaceutical Co., Ltd.'s (SZSE:002603 ) latest earnings release. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

See our latest analysis for Shijiazhuang Yiling Pharmaceutical

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Shijiazhuang Yiling Pharmaceutical's profit received a boost of CN¥94m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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. We can see that Shijiazhuang Yiling Pharmaceutical's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Shijiazhuang Yiling Pharmaceutical's Profit Performance

As we discussed above, we think the significant positive unusual item makes Shijiazhuang Yiling Pharmaceutical's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Shijiazhuang Yiling Pharmaceutical's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. If you want to do dive deeper into Shijiazhuang Yiling Pharmaceutical, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Shijiazhuang Yiling Pharmaceutical (1 is concerning) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Shijiazhuang Yiling Pharmaceutical's 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.