Unsurprisingly, Hangzhou Oxygen Plant Group Co.,Ltd.'s (SZSE:002430) stock price was strong on the back of its healthy earnings report. However, we think that shareholders may be missing some concerning details in the numbers.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Hangzhou Oxygen Plant GroupLtd's profit received a boost of CN¥145m 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. 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 that's as you'd expect, given these boosts are described as 'unusual'. If Hangzhou Oxygen Plant GroupLtd 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 Hangzhou Oxygen Plant GroupLtd's Profit Performance

Arguably, Hangzhou Oxygen Plant GroupLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Hangzhou Oxygen Plant GroupLtd's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 12% in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Hangzhou Oxygen Plant GroupLtd has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Hangzhou Oxygen Plant GroupLtd'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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.