Why Shandong Zhonglu Oceanic Fisheries' (SZSE:200992) Shaky Earnings Are Just The Beginning Of Its Problems

Shandong Zhonglu Oceanic Fisheries Company Limited's (SZSE:200992) stock showed strength, with investors undeterred by its weak earnings report. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Shandong Zhonglu Oceanic Fisheries.

View our latest analysis for Shandong Zhonglu Oceanic Fisheries

The Impact Of Unusual Items On Profit

To properly understand Shandong Zhonglu Oceanic Fisheries' profit results, we need to consider the CN¥30m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Shandong Zhonglu Oceanic Fisheries' positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shandong Zhonglu Oceanic Fisheries.

Our Take On Shandong Zhonglu Oceanic Fisheries' Profit Performance

As we discussed above, we think the significant positive unusual item makes Shandong Zhonglu Oceanic Fisheries' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Shandong Zhonglu Oceanic Fisheries' underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 4 warning signs for Shandong Zhonglu Oceanic Fisheries you should be mindful of and 1 of these bad boys doesn't sit too well with us.

Today we've zoomed in on a single data point to better understand the nature of Shandong Zhonglu Oceanic Fisheries' 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.