Soft earnings didn't appear to concern Pacific Textiles Holdings Limited's (HKG:1382) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
View our latest analysis for Pacific Textiles Holdings
How Do Unusual Items Influence Profit?
Importantly, our data indicates that Pacific Textiles Holdings' profit was reduced by HK$69m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If Pacific Textiles Holdings doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
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 Pacific Textiles Holdings' Profit Performance
Unusual items (expenses) detracted from Pacific Textiles Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think Pacific Textiles Holdings' 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. 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. Be aware that Pacific Textiles Holdings is showing 3 warning signs in our investment analysis and 1 of those is significant...
This note has only looked at a single factor that sheds light on the nature of Pacific Textiles Holdings' 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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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.
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