Unsurprisingly, Qingdao Vland Biotech INC.'s (SHSE:603739) stock price was strong on the back of its healthy earnings report. However, our analysis suggests that shareholders may be missing some factors that indicate the earnings result was not as good as it looked.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Qingdao Vland Biotech's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥28m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Qingdao Vland Biotech's Profit Performance

Arguably, Qingdao Vland Biotech's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Qingdao Vland Biotech's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 34% EPS growth in the last year. 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 Qingdao Vland Biotech, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Qingdao Vland Biotech and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Qingdao Vland Biotech'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 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.