The stock was sluggish on the back of Zhejiang Hangmin Co.,Ltd's (SHSE:600987) recent earnings report. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.
How Do Unusual Items Influence Profit?
Importantly, our data indicates that Zhejiang HangminLtd's profit was reduced by CN¥180m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Zhejiang HangminLtd 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 Zhejiang HangminLtd.
Our Take On Zhejiang HangminLtd's Profit Performance
Unusual items (expenses) detracted from Zhejiang HangminLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think Zhejiang HangminLtd's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 12% annually, 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. For example - Zhejiang HangminLtd 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 Zhejiang HangminLtd'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 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.