Shandong Hi-Speed New Energy Group Limited's (HKG:1250) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Shandong Hi-Speed New Energy Group's profit received a boost of HK$269m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. If Shandong Hi-Speed New Energy Group 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 Hi-Speed New Energy Group.

Our Take On Shandong Hi-Speed New Energy Group's Profit Performance

Arguably, Shandong Hi-Speed New Energy Group's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shandong Hi-Speed New Energy Group's statutory profits are better than its underlying earnings power. The good news is that, its earnings per share increased by 24% in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Shandong Hi-Speed New Energy Group as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 4 warning signs we've spotted with Shandong Hi-Speed New Energy Group (including 2 which are significant).

Today we've zoomed in on a single data point to better understand the nature of Shandong Hi-Speed New Energy Group'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.