Is There More To The Story Than YTO Express (International) Holdings's (HKG:6123) Earnings Growth?

As a general rule, we think profitable companies are less risky than companies that lose money. That said, the current statutory profit is not always a good guide to a company's underlying profitability. In this article, we'll look at how useful this year's statutory profit is, when analysing YTO Express (International) Holdings (HKG:6123).

We like the fact that YTO Express (International) Holdings made a profit of HK$116.4m on its revenue of HK$4.30b, in the last year. In the chart below, you can see that its profit and revenue have both grown over the last three years.

View our latest analysis for YTO Express (International) Holdings

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will discuss how unusual items have impacted YTO Express (International) Holdings' most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of YTO Express (International) Holdings.

The Impact Of Unusual Items On Profit

To properly understand YTO Express (International) Holdings' profit results, we need to consider the HK$18m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. 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 YTO Express (International) Holdings to produce a higher profit next year, all else being equal.

Our Take On YTO Express (International) Holdings' Profit Performance

Unusual items (expenses) detracted from YTO Express (International) Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think YTO Express (International) Holdings' earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. 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. If you'd like to know more about YTO Express (International) Holdings as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of YTO Express (International) Holdings.

Today we've zoomed in on a single data point to better understand the nature of YTO Express (International) Holdings' 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.

If you decide to trade YTO Express (International) Holdings, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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