Are WUS Printed Circuit's (TPE:2316) Statutory Earnings A Good Guide To Its Underlying Profitability?

Many investors consider it preferable to invest in profitable companies over unprofitable ones, because profitability suggests a business is sustainable. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. In this article, we'll look at how useful this year's statutory profit is, when analysing WUS Printed Circuit (TPE:2316).

While WUS Printed Circuit was able to generate revenue of NT$4.88b in the last twelve months, we think its profit result of NT$397.9m was more important. The chart below shows how profit has actually increased over the last three years, even while revenue has declined.

See our latest analysis for WUS Printed Circuit

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will discuss how unusual items have impacted WUS Printed Circuit'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 WUS Printed Circuit.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that WUS Printed Circuit's profit was reduced by NT$27m, due to unusual items, over the last year. 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 WUS Printed Circuit to produce a higher profit next year, all else being equal.

Our Take On WUS Printed Circuit's Profit Performance

Because unusual items detracted from WUS Printed Circuit's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think WUS Printed Circuit's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 2 warning signs for WUS Printed Circuit and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of WUS Printed Circuit's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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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