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

A lackluster earnings announcement from Shanghai Yuyuan Tourist Mart (Group) Co., Ltd. (SHSE:600655) last week didn't sink the stock price. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

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

How Do Unusual Items Influence Profit?

To properly understand Shanghai Yuyuan Tourist Mart (Group)'s profit results, we need to consider the CN¥378m gain attributed to unusual items. 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. And that's as you'd expect, given these boosts are described as 'unusual'. Shanghai Yuyuan Tourist Mart (Group) had a rather significant contribution from unusual items relative to its profit to September 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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. As a result, we think it may well be the case that Shanghai Yuyuan Tourist Mart (Group)'s underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Be aware that Shanghai Yuyuan Tourist Mart (Group) is showing 4 warning signs in our investment analysis and 1 of those can't be ignored...

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 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.