The market wasn't impressed with the soft earnings from Yuanjie Semiconductor Technology Co., Ltd. (SHSE:688498) recently. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Yuanjie Semiconductor Technology's profit received a boost of CN¥5.8m in unusual items, over the last year. 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 analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Yuanjie Semiconductor Technology doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Yuanjie Semiconductor Technology's Profit Performance

Arguably, Yuanjie Semiconductor Technology's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Yuanjie Semiconductor Technology's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Yuanjie Semiconductor Technology, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Yuanjie Semiconductor Technology you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Yuanjie Semiconductor Technology's profit. But there are plenty of other ways to inform your opinion of a company. 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.

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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.