Solid Earnings May Not Tell The Whole Story For Southeast Cement (TWSE:1110)

Southeast Cement Corp., Ltd.'s (TWSE:1110) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

View our latest analysis for Southeast Cement

The Impact Of Unusual Items On Profit

For anyone who wants to understand Southeast Cement's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from NT$137m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. Southeast Cement had a rather significant contribution from unusual items relative to its profit to December 2023. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Southeast Cement.

Our Take On Southeast Cement's Profit Performance

As we discussed above, we think the significant positive unusual item makes Southeast Cement's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Southeast Cement's underlying earnings power is lower than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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'd like to know more about Southeast Cement as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Southeast Cement has 1 warning sign and it would be unwise to ignore this.

This note has only looked at a single factor that sheds light on the nature of Southeast Cement'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. 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. 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.