Shareholders Can Be Confident That Min Aik Precision Industrial's (TWSE:4545) Earnings Are High Quality

Investors were underwhelmed by the solid earnings posted by Min Aik Precision Industrial Co., Ltd. (TWSE:4545) recently. We have done some analysis and have found some comforting factors beneath the profit numbers.

View our latest analysis for Min Aik Precision Industrial

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Min Aik Precision Industrial's profit was reduced by NT$20m, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Min Aik Precision Industrial doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Min Aik Precision Industrial.

Our Take On Min Aik Precision Industrial's Profit Performance

Because unusual items detracted from Min Aik Precision Industrial's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Min Aik Precision Industrial's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 2 warning signs for Min Aik Precision Industrial and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of Min Aik Precision Industrial's 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. 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 with significant insider holdings to be useful.

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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.