There May Be Some Bright Spots In Ausnutria Dairy's (HKG:1717) Earnings

The market for Ausnutria Dairy Corporation Ltd's (HKG:1717) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

Check out our latest analysis for Ausnutria Dairy

How Do Unusual Items Influence Profit?

For anyone who wants to understand Ausnutria Dairy's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥39m due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Ausnutria Dairy to produce a higher profit next year, all else being equal.

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 Ausnutria Dairy's Profit Performance

Because unusual items detracted from Ausnutria Dairy's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Ausnutria Dairy's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in 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 while earnings quality is important, it's equally important to consider the risks facing Ausnutria Dairy at this point in time. For example - Ausnutria Dairy has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Ausnutria Dairy'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. 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 with significant insider holdings 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.