Shareholders appeared unconcerned with Inner Mongolia Yuan Xing Energy Company Limited's (SZSE:000683) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

How Do Unusual Items Influence Profit?

To properly understand Inner Mongolia Yuan Xing Energy's profit results, we need to consider the CN¥1.1b expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. If Inner Mongolia Yuan Xing Energy doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Inner Mongolia Yuan Xing Energy's Profit Performance

Because unusual items detracted from Inner Mongolia Yuan Xing Energy's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Inner Mongolia Yuan Xing Energy's statutory profit actually understates its earnings potential! 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. If you'd like to know more about Inner Mongolia Yuan Xing Energy as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Inner Mongolia Yuan Xing Energy you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Inner Mongolia Yuan Xing Energy's profit. But there are plenty of other ways to inform your opinion of a company. 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 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.