Concerns Surrounding ASE Technology Holding's (TWSE:3711) Performance

Following the solid earnings report from ASE Technology Holding Co., Ltd. (TWSE:3711), the market responded by bidding up the stock price. Despite this, our analysis suggests that there are some factors weakening the foundations of those good profit numbers.

Check out our latest analysis for ASE Technology Holding

How Do Unusual Items Influence Profit?

Importantly, our data indicates that ASE Technology Holding's profit received a boost of NT$9.8b in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. If ASE Technology Holding doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 ASE Technology Holding's Profit Performance

Arguably, ASE Technology Holding's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that ASE Technology Holding's true underlying earnings power is actually less than its statutory profit. The good news is that its earnings per share increased slightly in the last year. 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. If you want to do dive deeper into ASE Technology Holding, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with ASE Technology Holding, and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of ASE Technology Holding'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 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.