We Like Shandong Gold Mining's (SHSE:600547) Earnings For More Than Just Statutory Profit

Despite posting healthy earnings, Shandong Gold Mining Co., Ltd.'s (SHSE:600547 ) stock has been quite weak. Along with the solid headline numbers, we think that investors have some reasons for optimism.

View our latest analysis for Shandong Gold Mining

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shandong Gold Mining's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥926m due 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Shandong Gold Mining to produce a higher profit next year, all else being equal.

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 Gold Mining's Profit Performance

Because unusual items detracted from Shandong Gold Mining's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Shandong Gold Mining's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 57% over the last twelve months. 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. So while earnings quality is important, it's equally important to consider the risks facing Shandong Gold Mining at this point in time. For instance, we've identified 2 warning signs for Shandong Gold Mining (1 makes us a bit uncomfortable) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Shandong Gold Mining'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.