Yangzhou Yangjie Electronic Technology's (SZSE:300373) Earnings Are Weaker Than They Seem

Despite posting some strong earnings, the market for Yangzhou Yangjie Electronic Technology Co., Ltd.'s (SZSE:300373) stock hasn't moved much. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

See our latest analysis for Yangzhou Yangjie Electronic Technology

How Do Unusual Items Influence Profit?

To properly understand Yangzhou Yangjie Electronic Technology's profit results, we need to consider the CN¥237m 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. 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 Yangzhou Yangjie Electronic Technology'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 Yangzhou Yangjie Electronic Technology's Profit Performance

As we discussed above, we think the significant positive unusual item makes Yangzhou Yangjie Electronic Technology's earnings a poor guide to its underlying profitability. For this reason, we think that Yangzhou Yangjie Electronic Technology's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But at least holders can take some solace from the 33% per annum growth in EPS for the last three. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing Yangzhou Yangjie Electronic Technology at this point in time. At Simply Wall St, we found 2 warning signs for Yangzhou Yangjie Electronic Technology and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Yangzhou Yangjie Electronic Technology'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 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.