Broadly speaking, profitable businesses are less risky than unprofitable ones. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. This article will consider whether P.C.B. Technologies’ (TLV:PCBT) statutory profits are a good guide to its underlying earnings.
It’s good to see that over the last twelve months P.C.B. Technologies made a profit of US$3.28m on revenue of US$111.9m. The good news is that the company managed to grow its revenue over the last three years, and also move from loss-making to profitable.
Not all profits are equal, and we can learn more about the nature of a company’s past profitability by diving deeper into the financial statements. This article will focus on the impact unusual items have had on P.C.B. Technologies’ statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of P.C.B. Technologies.
How Do Unusual Items Influence Profit?
For anyone who wants to understand P.C.B. Technologies’ profit beyond the statutory numbers, it’s important to note that during the last twelve months statutory profit was reduced by US$450k due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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 P.C.B. Technologies to produce a higher profit next year, all else being equal.
Our Take On P.C.B. Technologies’ Profit Performance
Unusual items (expenses) detracted from P.C.B. Technologies’ earnings over the last year, but we might see an improvement next year. Because of this, we think P.C.B. Technologies’ 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. If you want to do dive deeper into P.C.B. Technologies, you’d also look into what risks it is currently facing. For example – P.C.B. Technologies has 1 warning sign we think you should be aware of.
Today we’ve zoomed in on a single data point to better understand the nature of P.C.B. Technologies’ 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.
If you decide to trade P.C.B. Technologies, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.