We Think You Should Be Aware Of Some Concerning Factors In Yangtze Optical Fibre And Cable Limited's (HKG:6869) Earnings

The recent earnings posted by Yangtze Optical Fibre And Cable Joint Stock Limited Company (HKG:6869) were solid, but the stock didn't move as much as we expected. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for Yangtze Optical Fibre And Cable Limited

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Yangtze Optical Fibre And Cable Limited's profit received a boost of CN¥161m in unusual items, over the last year. 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 analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Yangtze Optical Fibre And Cable Limited's Profit Performance

Arguably, Yangtze Optical Fibre And Cable Limited's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Yangtze Optical Fibre And Cable Limited's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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. If you'd like to know more about Yangtze Optical Fibre And Cable Limited as a business, it's important to be aware of any risks it's facing. For example, Yangtze Optical Fibre And Cable Limited has 2 warning signs (and 1 which is potentially serious) we think you should know about.

Today we've zoomed in on a single data point to better understand the nature of Yangtze Optical Fibre And Cable Limited'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 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.