Shandong New Beiyang Information Technology (SZSE:002376) Is Posting Promising Earnings But The Good News Doesn’t Stop There

Shandong New Beiyang Information Technology Co., Ltd.'s (SZSE:002376) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

View our latest analysis for Shandong New Beiyang Information Technology

How Do Unusual Items Influence Profit?

To properly understand Shandong New Beiyang Information Technology's profit results, we need to consider the CN¥16m expense attributed 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. 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. In the twelve months to March 2024, Shandong New Beiyang Information Technology had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shandong New Beiyang Information Technology.

Our Take On Shandong New Beiyang Information Technology's Profit Performance

As we discussed above, we think the significant unusual expense will make Shandong New Beiyang Information Technology's statutory profit lower than it would otherwise have been. Because of this, we think Shandong New Beiyang Information Technology's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. 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 New Beiyang Information Technology at this point in time. For example, Shandong New Beiyang Information Technology has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

This note has only looked at a single factor that sheds light on the nature of Shandong New Beiyang Information Technology'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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.