The market shrugged off Shandong Golden Empire Precision Machinery Technology Co., Ltd.'s (SHSE:603270) solid earnings report. Our analysis showed that there are some concerning factors in the earnings that investors may be cautious of.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shandong Golden Empire Precision Machinery Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥31m 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. If Shandong Golden Empire Precision Machinery Technology doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shandong Golden Empire Precision Machinery Technology.

Our Take On Shandong Golden Empire Precision Machinery Technology's Profit Performance

We'd posit that Shandong Golden Empire Precision Machinery Technology's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Shandong Golden Empire Precision Machinery Technology's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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 Shandong Golden Empire Precision Machinery Technology as a business, it's important to be aware of any risks it's facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Shandong Golden Empire Precision Machinery Technology.

Today we've zoomed in on a single data point to better understand the nature of Shandong Golden Empire Precision Machinery Technology'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. 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.