Despite posting some strong earnings, the market for Pingtan Marine Enterprise Ltd.'s (NASDAQ:PME) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.

View our latest analysis for Pingtan Marine Enterprise

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Pingtan Marine Enterprise's profit received a boost of US$21m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. Pingtan Marine Enterprise had a rather significant contribution from unusual items relative to its profit to June 2022. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Pingtan Marine Enterprise.

Our Take On Pingtan Marine Enterprise's Profit Performance

As we discussed above, we think the significant positive unusual item makes Pingtan Marine Enterprise's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Pingtan Marine Enterprise's underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. 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. Every company has risks, and we've spotted 4 warning signs for Pingtan Marine Enterprise (of which 1 is potentially serious!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Pingtan Marine Enterprise'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. 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.