Should You Use Brighton-Best International (Taiwan)'s (GTSM:8415) Statutory Earnings To Analyse It?

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. In this article, we'll look at how useful this year's statutory profit is, when analysing Brighton-Best International (Taiwan) (GTSM:8415).

We like the fact that Brighton-Best International (Taiwan) made a profit of NT$480.4m on its revenue of NT$15.7b, in the last year. The chart below shows how it has grown revenue over the last three years, but that profit has declined.

See our latest analysis for Brighton-Best International (Taiwan)

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Brighton-Best International (Taiwan)'s statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Brighton-Best International (Taiwan).

How Do Unusual Items Influence Profit?

For anyone who wants to understand Brighton-Best International (Taiwan)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by NT$145m 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, after all, that's exactly what the accounting terminology implies. If Brighton-Best International (Taiwan) doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Brighton-Best International (Taiwan)'s Profit Performance

Unusual items (expenses) detracted from Brighton-Best International (Taiwan)'s earnings over the last year, but we might see an improvement next year. Because of this, we think Brighton-Best International (Taiwan)'s 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. For example - Brighton-Best International (Taiwan) has 3 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Brighton-Best International (Taiwan)'s 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. 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.

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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.
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