Anji Foodstuff Co., Ltd (SHSE:603696) just reported healthy earnings but the stock price didn't move much. Our analysis suggests that investors might be missing some promising details.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Anji Foodstuff's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥8.6m due to unusual items. 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 Anji Foodstuff 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 Anji Foodstuff.

Our Take On Anji Foodstuff's Profit Performance

Because unusual items detracted from Anji Foodstuff's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Anji Foodstuff's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Anji Foodstuff and you'll want to know about it.

This note has only looked at a single factor that sheds light on the nature of Anji Foodstuff'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.