XIANGPIAOPIAO Food Co.,Ltd's (SHSE:603711) robust recent earnings didn't do much to move the stock. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

How Do Unusual Items Influence Profit?

For anyone who wants to understand XIANGPIAOPIAO FoodLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥51m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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. If XIANGPIAOPIAO FoodLtd 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 XIANGPIAOPIAO FoodLtd's Profit Performance

Arguably, XIANGPIAOPIAO FoodLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that XIANGPIAOPIAO FoodLtd's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 30% 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 1 warning sign for XIANGPIAOPIAO FoodLtd and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of XIANGPIAOPIAO FoodLtd'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.