We Think You Should Be Aware Of Some Concerning Factors In Shaanxi Meineng Clean EnergyLtd's (SZSE:001299) Earnings

The market shrugged off Shaanxi Meineng Clean Energy Corp.,Ltd.'s (SZSE:001299) solid earnings report. We did some digging and believe investors may be worried about some underlying factors in the report.

See our latest analysis for Shaanxi Meineng Clean EnergyLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Shaanxi Meineng Clean EnergyLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from CN¥15m worth of 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'. If Shaanxi Meineng Clean EnergyLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Shaanxi Meineng Clean EnergyLtd.

Our Take On Shaanxi Meineng Clean EnergyLtd's Profit Performance

We'd posit that Shaanxi Meineng Clean EnergyLtd's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Shaanxi Meineng Clean EnergyLtd's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Our analysis shows 2 warning signs for Shaanxi Meineng Clean EnergyLtd (1 is concerning!) and we strongly recommend you look at these before investing.

Today we've zoomed in on a single data point to better understand the nature of Shaanxi Meineng Clean EnergyLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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.