We Think You Can Look Beyond Operadora de Sites Mexicanos. de's (BMV:SITES1A-1) Lackluster Earnings

The market for Operadora de Sites Mexicanos, S.A.B. de C.V.'s (BMV:SITES1A-1) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

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Examining Cashflow Against Operadora de Sites Mexicanos. de'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.

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.

For the year to September 2025, Operadora de Sites Mexicanos. de had an accrual ratio of -0.18. That indicates that its free cash flow quite significantly exceeded its statutory profit. Indeed, in the last twelve months it reported free cash flow of Mex$12b, well over the Mex$587.0m it reported in profit. Operadora de Sites Mexicanos. de's free cash flow improved over the last year, which is generally good to see.

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 Operadora de Sites Mexicanos. de's Profit Performance

As we discussed above, Operadora de Sites Mexicanos. de's accrual ratio indicates strong conversion of profit to free cash flow, which is a positive for the company. Because of this, we think Operadora de Sites Mexicanos. de's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in the last twelve months. 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. If you want to do dive deeper into Operadora de Sites Mexicanos. de, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Operadora de Sites Mexicanos. de and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Operadora de Sites Mexicanos. de's profit. But there are plenty of other ways to inform your opinion of a company. 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 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.