The market for Yunnan Copper Co.,Ltd's (SZSE:000878) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.
The Impact Of Unusual Items On Profit
For anyone who wants to understand Yunnan CopperLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥689m 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Yunnan CopperLtd to produce a higher profit next year, all else being equal.
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 Yunnan CopperLtd's Profit Performance
Unusual items (expenses) detracted from Yunnan CopperLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Yunnan CopperLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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. 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 Yunnan CopperLtd and we think they deserve your attention.
Today we've zoomed in on a single data point to better understand the nature of Yunnan CopperLtd'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 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.
