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Why Zhejiang Zone-King Environmental Sci&Tech's (SHSE:688701) Shaky Earnings Are Just The Beginning Of Its Problems
Why Zhejiang Zone-King Environmental Sci&Tech's (SHSE:688701) Shaky Earnings Are Just The Beginning Of Its Problems
A lackluster earnings announcement from Zhejiang Zone-King Environmental Sci&Tech Co., Ltd. (SHSE:688701) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.
Check out our latest analysis for Zhejiang Zone-King Environmental Sci&Tech
SHSE:688701 Earnings and Revenue History May 5th 2022Zooming In On Zhejiang Zone-King Environmental Sci&Tech's Earnings
One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. 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 it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".
Zhejiang Zone-King Environmental Sci&Tech has an accrual ratio of 0.28 for the year to March 2022. Unfortunately, that means its free cash flow was a lot less than its statutory profit, which makes us doubt the utility of profit as a guide. Even though it reported a profit of CN¥40.2m, a look at free cash flow indicates it actually burnt through CN¥70m in the last year. We also note that Zhejiang Zone-King Environmental Sci&Tech's free cash flow was actually negative last year as well, so we could understand if shareholders were bothered by its outflow of CN¥70m.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhejiang Zone-King Environmental Sci&Tech.
Our Take On Zhejiang Zone-King Environmental Sci&Tech's Profit Performance
Zhejiang Zone-King Environmental Sci&Tech's accrual ratio for the last twelve months signifies cash conversion is less than ideal, which is a negative when it comes to our view of its earnings. Because of this, we think that it may be that Zhejiang Zone-King Environmental Sci&Tech's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Zhejiang Zone-King Environmental Sci&Tech at this point in time. Case in point: We've spotted 3 warning signs for Zhejiang Zone-King Environmental Sci&Tech you should be mindful of and 1 of these doesn't sit too well with us.
Today we've zoomed in on a single data point to better understand the nature of Zhejiang Zone-King Environmental Sci&Tech'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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
A lackluster earnings announcement from Zhejiang Zone-King Environmental Sci&Tech Co., Ltd. (SHSE:688701) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.
一份平淡無奇的財報浙江環王環境科技有限公司。(上海證券交易所:688701)上週的股價並沒有下跌。然而,我們認為投資者應該意識到一些可能令人擔憂的潛在因素。
Check out our latest analysis for Zhejiang Zone-King Environmental Sci&Tech
查看我們對浙江特區王環境科技的最新分析
Zooming In On Zhejiang Zone-King Environmental Sci&Tech's Earnings
放大浙江特區王環境科技的收益
One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. 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.
衡量一家公司將利潤轉換為自由現金流(FCF)的程度的一個關鍵財務比率是應計比率。簡單地説,這個比率是從淨利潤中減去FCF,然後用這個數字除以該公司在此期間的平均運營資產。這個比率告訴我們,一家公司的利潤中有多少不是由自由現金流支持的。
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 it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".
這意味着負的應計比率是一件好事,因為它表明該公司帶來的自由現金流比其利潤所暗示的要多。雖然應計比率為正並不是問題,這表明非現金利潤達到了一定的水平,但高的應計比率可以説是一件壞事,因為它表明賬面利潤與現金流不匹配。引用勒維倫和雷蘇泰克2014年的一篇論文,“應計利潤較高的公司未來的利潤往往較低”。
Zhejiang Zone-King Environmental Sci&Tech has an accrual ratio of 0.28 for the year to March 2022. Unfortunately, that means its free cash flow was a lot less than its statutory profit, which makes us doubt the utility of profit as a guide. Even though it reported a profit of CN¥40.2m, a look at free cash flow indicates it actually burnt through CN¥70m in the last year. We also note that Zhejiang Zone-King Environmental Sci&Tech's free cash flow was actually negative last year as well, so we could understand if shareholders were bothered by its outflow of CN¥70m.
浙江特區王環境科技截至2022年3月的年度應計比率為0.28。不幸的是,這意味着其自由現金流遠遠低於其法定利潤,這讓我們懷疑利潤作為指導的效用。儘管該公司報告利潤為4020萬加元,但看看自由現金流就會發現,該公司去年實際上燒掉了7000萬加元。我們還注意到,浙江特區王環境科技去年的自由現金流實際上也是負的,所以我們可以理解股東是否對其7000萬元的流出感到困擾。
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Zhejiang Zone-King Environmental Sci&Tech.
注:我們總是建議投資者檢查資產負債表的實力。點擊此處查看我們對浙江環王環境科技的資產負債表分析。
Our Take On Zhejiang Zone-King Environmental Sci&Tech's Profit Performance
我們看浙江環王環境科技的盈利表現
Zhejiang Zone-King Environmental Sci&Tech's accrual ratio for the last twelve months signifies cash conversion is less than ideal, which is a negative when it comes to our view of its earnings. Because of this, we think that it may be that Zhejiang Zone-King Environmental Sci&Tech's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Zhejiang Zone-King Environmental Sci&Tech at this point in time. Case in point: We've spotted 3 warning signs for Zhejiang Zone-King Environmental Sci&Tech you should be mindful of and 1 of these doesn't sit too well with us.
浙江特區王環境科技過去12個月的權責發生率表明現金轉換不太理想,這對我們對其收益的看法是負面的。正因為如此,我們認為,浙江特區王環境科技的法定利潤可能好於其潛在的盈利能力。更壞的消息是,該公司去年的每股收益有所下降。本文的目的是評估我們可以在多大程度上依賴法定收益來反映公司的潛力,但還有很多東西需要考慮。因此,在盈利質量很重要的同時,考慮到浙江特區王環境科技目前面臨的風險也同樣重要。舉個例子:我們發現了三個浙江特區王環境科技的警示標誌,你應該注意,其中一個不太適合我們。
Today we've zoomed in on a single data point to better understand the nature of Zhejiang Zone-King Environmental Sci&Tech'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. 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.
今天,我們放大了一個數據點,以更好地瞭解浙江特區王環境科技的利潤性質。但如果你有能力將注意力集中在細枝末節上,總會有更多的東西需要發現。例如,許多人認為高股本回報率是有利的商業經濟指標,而另一些人則喜歡“跟着錢走”,尋找內部人士正在買入的股票。雖然這可能需要為您做一些研究,但您可能會發現免費擁有高股本回報率的公司的集合,或者是內部人士購買的有用的股票清單。
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
對這篇文章有什麼反饋嗎?擔心內容嗎?保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
這篇由《華爾街日報》撰寫的文章本質上是籠統的。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。簡單地説,華爾街在提到的任何股票中都沒有頭寸。
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moomoo是Moomoo Technologies Inc.公司提供的金融資訊和交易應用程式。
在美國,moomoo上的投資產品和服務由Moomoo Financial Inc.提供,一家受美國證券交易委員會(SEC)監管的持牌主體。 Moomoo Financial Inc.是金融業監管局(FINRA)和證券投資者保護公司(SIPC)的成員。
在新加坡,moomoo上的投資產品和服務是通過Moomoo Financial Singapore Pte. Ltd.提供,該公司受新加坡金融管理局(MAS)監管(牌照號碼︰CMS101000) ,持有資本市場服務牌照 (CMS) ,持有財務顧問豁免(Exempt Financial Adviser)資質。本內容未經新加坡金融管理局的審查。
在澳大利亞,moomoo上的金融產品和服務是通過Futu Securities (Australia) Ltd提供,該公司是受澳大利亞證券和投資委員會(ASIC)監管的澳大利亞金融服務許可機構(AFSL No. 224663)。請閱讀並理解我們的《金融服務指南》、《條款與條件》、《隱私政策》和其他披露文件,這些文件可在我們的網站 https://www.moomoo.com/au中獲取。
在加拿大,透過moomoo應用程式提供的僅限訂單執行的券商服務由Moomoo Financial Canada Inc.提供,並受加拿大投資監管機構(CIRO)監管。
在馬來西亞,moomoo上的投資產品和服務是透過Moomoo Securities Malaysia Sdn. Bhd. 提供,該公司受馬來西亞證券監督委員會(SC)監管(牌照號碼︰eCMSL/A0397/2024) ,持有資本市場服務牌照 (CMSL) 。本內容未經馬來西亞證券監督委員會的審查。
Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd.,Futu Securities (Australia) Ltd, Moomoo Financial Canada Inc和Moomoo Securities Malaysia Sdn. Bhd., 是關聯公司。
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