Beijing Jiuzhouyigui Environmental Technology Co., Ltd.'s (SHSE:688485) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. We think that investors might be looking at some positive factors beyond the earnings numbers.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Beijing Jiuzhouyigui Environmental Technology's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥4.8m 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Beijing Jiuzhouyigui Environmental Technology to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Beijing Jiuzhouyigui Environmental Technology.

Our Take On Beijing Jiuzhouyigui Environmental Technology's Profit Performance

Unusual items (expenses) detracted from Beijing Jiuzhouyigui Environmental Technology's earnings over the last year, but we might see an improvement next year. Because of this, we think Beijing Jiuzhouyigui Environmental Technology's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. 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. For instance, we've identified 4 warning signs for Beijing Jiuzhouyigui Environmental Technology (1 is a bit concerning) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Beijing Jiuzhouyigui Environmental Technology'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 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.