Soft earnings didn't appear to concern Jiangsu Hengshun Vinegar-Industry Co.,Ltd's (SHSE:600305) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jiangsu Hengshun Vinegar-IndustryLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥14m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Jiangsu Hengshun Vinegar-IndustryLtd 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 Jiangsu Hengshun Vinegar-IndustryLtd's Profit Performance

Unusual items (expenses) detracted from Jiangsu Hengshun Vinegar-IndustryLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Jiangsu Hengshun Vinegar-IndustryLtd's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over 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 want to do dive deeper into Jiangsu Hengshun Vinegar-IndustryLtd, you'd also look into what risks it is currently facing. Be aware that Jiangsu Hengshun Vinegar-IndustryLtd is showing 2 warning signs in our investment analysis and 1 of those is significant...

Today we've zoomed in on a single data point to better understand the nature of Jiangsu Hengshun Vinegar-IndustryLtd'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 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.