We Think That There Are More Issues For Shanghai Yuyuan Tourist Mart (Group) (SHSE:600655) Than Just Sluggish Earnings

The market wasn't impressed with the soft earnings from Shanghai Yuyuan Tourist Mart (Group) Co., Ltd. (SHSE:600655) recently. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

Check out our latest analysis for Shanghai Yuyuan Tourist Mart (Group)

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shanghai Yuyuan Tourist Mart (Group)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥209m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Shanghai Yuyuan Tourist Mart (Group)'s positive unusual items were quite significant relative to its profit in the year to December 2023. 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 Shanghai Yuyuan Tourist Mart (Group)'s Profit Performance

As we discussed above, we think the significant positive unusual item makes Shanghai Yuyuan Tourist Mart (Group)'s earnings a poor guide to its underlying profitability. For this reason, we think that Shanghai Yuyuan Tourist Mart (Group)'s statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. 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. 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. For example, Shanghai Yuyuan Tourist Mart (Group) has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Shanghai Yuyuan Tourist Mart (Group)'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 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.