The market for LIAONING ENERGY INDUSTRY Co.,LTD's (SHSE:600758) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

How Do Unusual Items Influence Profit?

For anyone who wants to understand LIAONING ENERGY INDUSTRYLTD's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥44m due 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect LIAONING ENERGY INDUSTRYLTD to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of LIAONING ENERGY INDUSTRYLTD.

Our Take On LIAONING ENERGY INDUSTRYLTD's Profit Performance

Because unusual items detracted from LIAONING ENERGY INDUSTRYLTD'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 LIAONING ENERGY INDUSTRYLTD's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 3 warning signs with LIAONING ENERGY INDUSTRYLTD, and understanding these should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of LIAONING ENERGY INDUSTRYLTD'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 with high insider ownership.

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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.