Here's Why We Don't Think Bonny Worldwide's (TPE:8467) Statutory Earnings Reflect Its Underlying Earnings Potential

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. 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. This article will consider whether Bonny Worldwide's (TPE:8467) statutory profits are a good guide to its underlying earnings.

It's good to see that over the last twelve months Bonny Worldwide made a profit of NT$70.0m on revenue of NT$1.14b. Below, you can see that both its revenue and its profit have fallen over the last three years.

View our latest analysis for Bonny Worldwide

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will discuss how unusual items have impacted Bonny Worldwide's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Bonny Worldwide.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Bonny Worldwide's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from NT$54m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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 that's as you'd expect, given these boosts are described as 'unusual'. Bonny Worldwide had a rather significant contribution from unusual items relative to its profit to September 2020. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Our Take On Bonny Worldwide's Profit Performance

As we discussed above, we think the significant positive unusual item makes Bonny Worldwide'searnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Bonny Worldwide's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. If you want to do dive deeper into Bonny Worldwide, you'd also look into what risks it is currently facing. To help with this, we've discovered 6 warning signs (1 is a bit concerning!) that you ought to be aware of before buying any shares in Bonny Worldwide.

Today we've zoomed in on a single data point to better understand the nature of Bonny Worldwide'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 that insiders are buying.

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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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