FuJian YanJing HuiQuan Brewery Co.,Ltd's (SHSE:600573) solid earnings announcement recently didn't do much to the stock price. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

Check out our latest analysis for FuJian YanJing HuiQuan BreweryLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand FuJian YanJing HuiQuan BreweryLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥3.2m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If FuJian YanJing HuiQuan BreweryLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of FuJian YanJing HuiQuan BreweryLtd.

Our Take On FuJian YanJing HuiQuan BreweryLtd's Profit Performance

Unusual items (expenses) detracted from FuJian YanJing HuiQuan BreweryLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that FuJian YanJing HuiQuan BreweryLtd's statutory profit actually understates its earnings potential! And the EPS is up 56% annually, over the last three years. 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. So while earnings quality is important, it's equally important to consider the risks facing FuJian YanJing HuiQuan BreweryLtd at this point in time. You'd be interested to know, that we found 1 warning sign for FuJian YanJing HuiQuan BreweryLtd and you'll want to know about it.

Today we've zoomed in on a single data point to better understand the nature of FuJian YanJing HuiQuan BreweryLtd'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 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.