Shareholders appeared unconcerned with Zhejiang Shapuaisi Pharmaceutical Co.,Ltd.'s (SHSE:603168) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

How Do Unusual Items Influence Profit?

To properly understand Zhejiang Shapuaisi PharmaceuticalLtd's profit results, we need to consider the CN¥13m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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. Zhejiang Shapuaisi PharmaceuticalLtd took a rather significant hit from unusual items in the year to December 2023. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhejiang Shapuaisi PharmaceuticalLtd.

Our Take On Zhejiang Shapuaisi PharmaceuticalLtd's Profit Performance

As we mentioned previously, the Zhejiang Shapuaisi PharmaceuticalLtd's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that Zhejiang Shapuaisi PharmaceuticalLtd's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Zhejiang Shapuaisi PharmaceuticalLtd as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Zhejiang Shapuaisi PharmaceuticalLtd and you'll want to know about these bad boys.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Shapuaisi PharmaceuticalLtd'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.