Despite posting some strong earnings, the market for Yongjin Technology Group Co., Ltd.'s (SHSE:603995) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.
How Do Unusual Items Influence Profit?
Importantly, our data indicates that Yongjin Technology Group's profit received a boost of CN¥94m 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. 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 Yongjin Technology Group 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 Yongjin Technology Group's Profit Performance
Arguably, Yongjin Technology Group's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Yongjin Technology Group's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 12% per annum growth in EPS for the last three. 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 Yongjin Technology Group, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Yongjin Technology Group and we think they deserve your attention.
Today we've zoomed in on a single data point to better understand the nature of Yongjin Technology Group'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.
