Despite Shandong Shuangyi Technology Co., Ltd.'s (SZSE:300690) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Shandong Shuangyi Technology.

How Do Unusual Items Influence Profit?

To properly understand Shandong Shuangyi Technology's profit results, we need to consider the CN¥8.7m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Shandong Shuangyi Technology doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Shandong Shuangyi Technology's Profit Performance

Arguably, Shandong Shuangyi Technology's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Shandong Shuangyi Technology's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in 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. If you'd like to know more about Shandong Shuangyi Technology as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Shandong Shuangyi Technology and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Shandong Shuangyi Technology's profit. But there are plenty of other ways to inform your opinion of a company. 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.