Global Lighting Technologies' (TWSE:4935) Soft Earnings Are Actually Better Than They Appear

The most recent earnings report from Global Lighting Technologies Inc. (TWSE:4935) was disappointing for shareholders. While the headline numbers were soft, we believe that investors might be missing some encouraging factors.

View our latest analysis for Global Lighting Technologies

The Impact Of Unusual Items On Profit

For anyone who wants to understand Global Lighting Technologies' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by NT$62m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Global Lighting Technologies to produce a higher profit next year, all else being equal.

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 Global Lighting Technologies' Profit Performance

Unusual items (expenses) detracted from Global Lighting Technologies' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Global Lighting Technologies' statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Global Lighting Technologies (of which 1 is a bit concerning!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Global Lighting Technologies' 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.