A lackluster earnings announcement from Harbin Electric Corporation Jiamusi Electric Machine CO.,Ltd (SZSE:000922) last week didn't sink the stock price. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

Check out our latest analysis for Harbin Electric Corporation Jiamusi Electric MachineLtd

The Impact Of Unusual Items On Profit

To properly understand Harbin Electric Corporation Jiamusi Electric MachineLtd's profit results, we need to consider the CN¥33m gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Harbin Electric Corporation Jiamusi Electric MachineLtd.

Our Take On Harbin Electric Corporation Jiamusi Electric MachineLtd's Profit Performance

Arguably, Harbin Electric Corporation Jiamusi Electric MachineLtd's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Harbin Electric Corporation Jiamusi Electric MachineLtd's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 3 warning signs for Harbin Electric Corporation Jiamusi Electric MachineLtd and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Harbin Electric Corporation Jiamusi Electric MachineLtd'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.