Despite Yongtaiyun Chemical Logistics Co.,Ltd's (SZSE:001228) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Yongtaiyun Chemical LogisticsLtd.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Yongtaiyun Chemical LogisticsLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥34m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Yongtaiyun Chemical LogisticsLtd's Profit Performance

Arguably, Yongtaiyun Chemical LogisticsLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Yongtaiyun Chemical LogisticsLtd's true underlying earnings power is actually less than its statutory profit. But at least holders can take some solace from the 51% per annum growth in EPS for the last three. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 1 warning sign for Yongtaiyun Chemical LogisticsLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Yongtaiyun Chemical LogisticsLtd's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.