Last week's earnings announcement from Tianjin LVYIN Landscape and Ecology Construction Co., Ltd (SZSE:002887) was disappointing to investors, with a sluggish profit figure. We did some analysis, and found that there are some reasons to be cautious about the headline numbers.

How Do Unusual Items Influence Profit?

To properly understand Tianjin LVYIN Landscape and Ecology Construction's profit results, we need to consider the CN¥17m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. We can see that Tianjin LVYIN Landscape and Ecology Construction's positive unusual items were quite significant relative to its profit in the year to June 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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 Tianjin LVYIN Landscape and Ecology Construction's Profit Performance

As we discussed above, we think the significant positive unusual item makes Tianjin LVYIN Landscape and Ecology Construction's earnings a poor guide to its underlying profitability. For this reason, we think that Tianjin LVYIN Landscape and Ecology Construction's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. In further bad news, its earnings per share decreased in the last year. 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 Tianjin LVYIN Landscape and Ecology Construction as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Tianjin LVYIN Landscape and Ecology Construction, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of Tianjin LVYIN Landscape and Ecology Construction's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.