Pacific Radiance Ltd.'s (SGX:RXS) solid earnings report last week was underwhelming to investors. We think that they may be worried about something else, so we did some analysis and found that investors have noticed some soft numbers underlying the profit.
See our latest analysis for Pacific Radiance
SGX:RXS Earnings and Revenue History November 21st 2022
Examining Cashflow Against Pacific Radiance's Earnings
As finance nerds would already know, the accrual ratio from cashflow is a key measure for assessing how well a company's free cash flow (FCF) matches its profit. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. This ratio tells us how much of a company's profit is not backed by free cashflow.
That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
Over the twelve months to September 2022, Pacific Radiance recorded an accrual ratio of 4.22. Ergo, its free cash flow is significantly weaker than its profit. As a general rule, that bodes poorly for future profitability. In fact, it had free cash flow of US$4.3m in the last year, which was a lot less than its statutory profit of US$330.3m. Pacific Radiance shareholders will no doubt be hoping that its free cash flow bounces back next year, since it was down over the last twelve months. Unfortunately for shareholders, the company has also been issuing new shares, diluting their share of future earnings. The good news for shareholders is that Pacific Radiance's accrual ratio was much better last year, so this year's poor reading might simply be a case of a short term mismatch between profit and FCF. Shareholders should look for improved cashflow relative to profit in the current year, if that is indeed the case.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Pacific Radiance.
In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, Pacific Radiance increased the number of shares on issue by 530% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. Check out Pacific Radiance's historical EPS growth by clicking on this link.
A Look At The Impact Of Pacific Radiance's Dilution On Its Earnings Per Share (EPS)
Pacific Radiance was losing money three years ago. The good news is that profit was up 3,274% in the last twelve months. But EPS was less impressive, up only 2,109% in that time. So you can see that the dilution has had a fairly significant impact on shareholders.
In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Pacific Radiance can grow EPS persistently. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.
Our Take On Pacific Radiance's Profit Performance
As it turns out, Pacific Radiance couldn't match its profit with cashflow and its dilution means that earnings per share growth is lagging net income growth. On reflection, the above-mentioned factors give us the strong impression that Pacific Radiance'sunderlying earnings power is not as good as it might seem, based on the statutory profit numbers. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Be aware that Pacific Radiance is showing 3 warning signs in our investment analysis and 2 of those shouldn't be ignored...
In this article we've looked at a number of factors that can impair the utility of profit numbers, and we've come away cautious. 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 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.
太平洋辐射有限公司's (SGX: RXS) 上周稳健的收益报告令投资者不知所措。我们认为他们可能会担心其他事情,因此我们进行了一些分析,发现投资者已经注意到利润背后的一些疲软数字。
查看我们对 Pacific Radiance 的最新分析
新加坡证券交易所:RXS 收益和收入历史 2022 年 11 月 21 日
根据Pacific Radiance的收益来研究现金流
正如金融爱好者已经知道的那样, 现金流应计比率 是评估公司的自由现金流(FCF)与利润相匹配程度的关键指标。简而言之,该比率从净利润中减去FCF,然后将该数字除以公司在此期间的平均运营资产。这个比率告诉我们,公司有多少利润没有自由现金流的支持。
这意味着负应计比率是一件好事,因为它表明该公司带来的自由现金流比其利润所暗示的要多。虽然应计比率高于零并不令人担忧,但我们确实认为,当公司的应计比率相对较高时,值得注意。这是因为一些学术研究表明,高应计率往往会导致利润下降或利润增长减弱。
在截至2022年9月的十二个月中,Pacific Radiance的应计比率为4.22。因此,其自由现金流明显弱于其利润。一般而言,这对未来的盈利能力来说是个坏兆头。实际上,它去年的自由现金流为430万美元,远低于其3.303亿美元的法定利润。Pacific Radiance的股东无疑希望其自由现金流在明年反弹,因为自由现金流在过去十二个月中有所下降。对于股东来说,不幸的是,该公司也一直在发行新股,稀释了他们在未来收益中所占的份额。对股东来说,好消息是Pacific Radiance去年的应计比率要好得多,因此今年的糟糕数据可能只是利润与FCF之间的短期不匹配的例子。如果确实如此,股东应该寻求本年度相对于利润的现金流有所改善。
注意: 我们始终建议投资者检查资产负债表的强度。点击此处查看我们对Pacific Radiance的资产负债表分析。
为了了解每股回报的可能性,必须考虑一家公司在多大程度上稀释了股东。实际上,在过去的十二个月中,Pacific Radiance通过发行新股将已发行股票数量增加了530%。这意味着其收益将分配给更多的股份。每股收益等每股指标可以帮助我们了解实际股东从公司的利润中受益多少,而净收入水平可以让我们更好地了解公司的绝对规模。点击此链接,查看Pacific Radiance的历史每股收益增长。
看看Pacific Radiance的稀释对其每股收益(EPS)的影响
Pacific Radiance 三年前就亏损了。好消息是,在过去的十二个月中,利润增长了3,274%。但是每股收益却不那么令人印象深刻,在那段时间内仅增长了2109%。因此,你可以看到,稀释对股东产生了相当大的影响。
从长远来看,收益 每股 增长应该促使股价上涨。因此,如果Pacific Radiance能够持续增长每股收益,那肯定对股东有利。但是,如果其利润增加而每股收益保持不变(甚至下降),那么股东可能看不到太大的收益。出于这个原因,你可以说从长远来看,每股收益比净收入更重要,前提是目标是评估公司的股价是否会上涨。
我们对Pacific Radiance利润表现的看法
事实证明,Pacific Radiance无法将其利润与现金流相提并论,其稀释意味着每股收益增长落后于净收入增长。经过反思,上述因素给我们留下了强烈的印象,即根据法定利润数字,Pacific Radiance的基本盈利能力并不像看起来那样好。请记住,在分析股票时,值得注意所涉及的风险。注意 Pacific Radiance 正在显现 我们的投资分析中有三个警告信号 其中有两个不容忽视...
在这篇文章中,我们研究了许多可能损害利润数字效用的因素,我们持谨慎态度。但是还有很多其他方法可以告诉你对公司的看法。例如,许多人认为高股本回报率表明商业经济状况良好,而另一些人则喜欢 “关注资金”,寻找内部人士正在买入的股票。所以你可能希望看到这个 免费的 一系列拥有高股本回报率的公司,或者这份内部人士正在买入的股票清单。
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Simply Wall St 的这篇文章本质上是一般性的。 我们仅使用不偏不倚的方法根据历史数据和分析师预测提供评论,我们的文章并非旨在提供财务建议。 它不构成买入或卖出任何股票的建议,也没有考虑您的目标或财务状况。我们的目标是为您提供由基本面数据驱动的长期重点分析。请注意,我们的分析可能未将最新的价格敏感型公司公告或定性材料考虑在内。简而言之,华尔街对上述任何股票都没有头寸。