The most recent earnings report from Huaxia Eye Hospital Group Co.,Ltd. (SZSE:301267) was disappointing for shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Huaxia Eye Hospital GroupLtd's profit was reduced by CN¥123m, due to unusual items, over the last year. 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. If Huaxia Eye Hospital GroupLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Huaxia Eye Hospital GroupLtd's Profit Performance

Because unusual items detracted from Huaxia Eye Hospital GroupLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Huaxia Eye Hospital GroupLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 5.9% per year over the last three years. 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 Huaxia Eye Hospital GroupLtd, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Huaxia Eye Hospital GroupLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Huaxia Eye Hospital GroupLtd'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. 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.