Shareholders Can Be Confident That SINOPEC Shandong Taishan Pectroleum's (SZSE:000554) Earnings Are High Quality

Even though SINOPEC Shandong Taishan Pectroleum Co., Ltd.'s (SZSE:000554) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

View our latest analysis for SINOPEC Shandong Taishan Pectroleum

How Do Unusual Items Influence Profit?

For anyone who wants to understand SINOPEC Shandong Taishan Pectroleum's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥16m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If SINOPEC Shandong Taishan Pectroleum doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of SINOPEC Shandong Taishan Pectroleum.

Our Take On SINOPEC Shandong Taishan Pectroleum's Profit Performance

Unusual items (expenses) detracted from SINOPEC Shandong Taishan Pectroleum's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that SINOPEC Shandong Taishan Pectroleum's statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 1 warning sign for SINOPEC Shandong Taishan Pectroleum you should know about.

This note has only looked at a single factor that sheds light on the nature of SINOPEC Shandong Taishan Pectroleum'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.