Ta Ya Electric Wire & Cable's (TWSE:1609) Anemic Earnings Might Be Worse Than You Think

Ta Ya Electric Wire & Cable Co., Ltd.'s (TWSE:1609) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Ta Ya Electric Wire & Cable

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Ta Ya Electric Wire & Cable's profit received a boost of NT$1.6b in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. We can see that Ta Ya Electric Wire & Cable's positive unusual items were quite significant relative to its profit in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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 Ta Ya Electric Wire & Cable's Profit Performance

As we discussed above, we think the significant positive unusual item makes Ta Ya Electric Wire & Cable's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Ta Ya Electric Wire & Cable's underlying earnings power is lower than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 48% over the last three years. 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. So while earnings quality is important, it's equally important to consider the risks facing Ta Ya Electric Wire & Cable at this point in time. When we did our research, we found 5 warning signs for Ta Ya Electric Wire & Cable (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

This note has only looked at a single factor that sheds light on the nature of Ta Ya Electric Wire & Cable'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. 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.