The market for Pentamaster International Limited's (HKG:1665) stock was strong after it released a healthy earnings report last week. However, we think that shareholders should be cautious as we found some worrying factors underlying the profit.
Check out our latest analysis for Pentamaster International
SEHK:1665 Earnings and Revenue History August 18th 2022
Examining Cashflow Against Pentamaster International's Earnings
Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. This ratio tells us how much of a company's profit is not backed by free cashflow.
Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. That is not intended to imply we should worry about a positive accrual ratio, but it's worth noting where the accrual ratio is rather high. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
Pentamaster International has an accrual ratio of 0.33 for the year to June 2022. We can therefore deduce that its free cash flow fell well short of covering its statutory profit, suggesting we might want to think twice before putting a lot of weight on the latter. To wit, it produced free cash flow of RM26m during the period, falling well short of its reported profit of RM125.3m. Pentamaster International's free cash flow actually declined over the last year, but it may bounce back next year, since free cash flow is often more volatile than accounting profits.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On Pentamaster International's Profit Performance
As we discussed above, we think Pentamaster International's earnings were not supported by free cash flow, which might concern some investors. As a result, we think it may well be the case that Pentamaster International's underlying earnings power is lower than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 7.4% over the last three years. 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. In terms of investment risks, we've identified 1 warning sign with Pentamaster International, and understanding it should be part of your investment process.
This note has only looked at a single factor that sheds light on the nature of Pentamaster International'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.
中国的市场五角星国际有限公司(HKG:1665)上周发布健康的收益报告后,股票表现强劲。然而,我们认为股东应该谨慎,因为我们发现了一些令人担忧的利润背后的因素。
请查看我们对五角星国际的最新分析
联交所:1665盈利及收入历史2022年8月18日
检查现金流与五角星国际公司的收益
许多投资者都没有听说过现金流应计比率但它实际上是衡量一家公司在给定时期内自由现金流(FCF)支持公司利润的程度的有用指标。为了得到应计比率,我们首先从一个时期的利润中减去FCF,然后用这个数字除以该时期的平均运营资产。这个比率告诉我们,一家公司的利润中有多少不是由自由现金流支持的。
因此,当一家公司的应计比率为负时,它实际上被认为是一件好事,但如果它的应计比率为正,那就是一件坏事。这并不意味着我们应该担心应计比率为正,但值得注意的是,在应计比率相当高的地方。这是因为一些学术研究表明,高应计制比率往往会导致较低的利润或较低的利润增长。
五角星国际在截至2022年6月的一年中的应计比率为0.33。因此,我们可以推断,它的自由现金流远远低于其法定利润,这表明我们在加大对后者的重视之前,可能需要三思而后行。换言之,该公司在此期间产生了2600万林吉特的自由现金流,远低于其公布的1.253亿林吉特的利润。五角星国际的自由现金流实际上在去年有所下降,但明年可能会反弹,因为自由现金流的波动性往往比会计利润更大。
这可能会让你想知道,分析师对未来盈利能力的预测是什么。幸运的是,您可以单击此处查看基于他们估计的未来盈利能力的互动图表。
我们对五角星国际公司利润表现的看法
正如我们上面讨论的,我们认为五角星国际的收益没有得到自由现金流的支持,这可能会让一些投资者感到担忧。因此,我们认为情况很可能是五菱国际的潜在盈利能力低于其法定利润。尽管如此,值得注意的是,它的每股收益在过去三年里增长了7.4%。当然,当谈到分析其收益时,我们只是触及了皮毛;人们还可以考虑利润率、预测增长和投资回报等因素。因此,如果你想更深入地研究这只股票,考虑它面临的任何风险是至关重要的。在投资风险方面,我们已经确定了1个警告信号与五角星国际公司合作,并理解这应该是您投资过程的一部分。
这份报告只关注了一个因素,它揭示了五角大楼国际公司的利润性质。但如果你有能力将注意力集中在细枝末节上,总会有更多的东西需要发现。一些人认为,高股本回报率是高质量企业的良好标志。所以你可能想看看这个免费拥有高股本回报率的公司的集合,或内部人士正在购买的这份股票清单。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。