Yantai Changyu Pioneer Wine Company Limited (SZSE:000869) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, we think that shareholders may be missing some concerning details in the numbers.
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Yantai Changyu Pioneer Wine's profit received a boost of CN¥50m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine's Profit Performance
Arguably, Yantai Changyu Pioneer Wine's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Yantai Changyu Pioneer Wine's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 13% 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. If you'd like to know more about Yantai Changyu Pioneer Wine as a business, it's important to be aware of any risks it's facing. For example - Yantai Changyu Pioneer Wine has 1 warning sign we think you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of Yantai Changyu Pioneer Wine's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.