ACT Energy Technologies Ltd. (TSE:ACX) recently announced good results and the market rewarded this with a strong increase in the share price. Upon closer inspection of the numbers, we found several encouraging factors in addition to the earnings figures.
Check out our latest analysis for ACT Energy Technologies
The impact of unusual items on profit
For anyone looking to understand ACT Energy Technologies’ profit beyond the statutory numbers, it’s important to know that statutory profit was reduced by CA$10m over the last twelve months due to unusual items. While deductions due to unusual items are disappointing to begin with, there is one silver lining. When we analyzed the vast majority of publicly traded companies globally, we found that significant unusual items are often non-recurring. And that’s exactly what accounting terminology implies. If these unusual expenses are non-recurring at ACT Energy Technologies, all else being equal, we would expect profit to grow in the coming year.
You may be wondering what analysts are predicting in terms of future profitability. Fortunately, you can click here to see an interactive chart depicting future profitability based on their estimates.
Our assessment of ACT Energy Technologies’ earnings development
Unusual items (expenses) have hurt ACT Energy Technologies’ earnings over the last year, but we could see an improvement next year. Based on this observation, we think it’s likely that ACT Energy Technologies’ statutory profit actually understates its earnings potential! Unfortunately, earnings per share have actually declined over the last year. The goal of this article was to assess how well we can trust the statutory profit to reflect the company’s potential, but there’s a lot more to consider. If you want to learn more about ACT Energy Technologies as a company, it’s important to be aware of all the risks it faces. In terms of investment risks: We have identified 3 warning signs with ACT Energy Technologies, and understanding them should be part of your investment process.
This note has only examined a single factor that sheds light on the nature of ACT Energy Technologies’ earnings. But there is always more to discover if you are able to focus on the small details. Some people consider a high return on equity to be a good sign of a quality company. Although this may require a little research, you may find that free Collection of companies with high return on equity or this list of stocks with significant insider holdings may prove useful.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
