After announcing weak earnings, Grand Banks Yachts Limited's (SGX:G50) stock was strong. Despite the market responding positively, we think that there are several concerning factors that investors should be aware of.
Check out our latest analysis for Grand Banks Yachts
SGX:G50 Earnings and Revenue History September 5th 2022
Zooming In On Grand Banks Yachts' Earnings
In high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accrual ratio (from cashflow). To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. You could think of the accrual ratio from cashflow as the 'non-FCF profit ratio'.
That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
For the year to June 2022, Grand Banks Yachts had an accrual ratio of 0.47. Statistically speaking, that's a real negative for future earnings. To wit, the company did not generate one whit of free cashflow in that time. In the last twelve months it actually had negative free cash flow, with an outflow of S$8.2m despite its profit of S$4.01m, mentioned above. It's worth noting that Grand Banks Yachts generated positive FCF of S$37m a year ago, so at least they've done it in the past. However, we can see that a recent tax benefit, along with unusual items, have impacted its statutory profit, and therefore its accrual ratio. The good news for shareholders is that Grand Banks Yachts' accrual ratio was much better last year, so this year's poor reading might simply be a case of a short term mismatch between profit and FCF. As a result, some shareholders may be looking for stronger cash conversion in the current year.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Grand Banks Yachts.
The Impact Of Unusual Items On Profit
The fact that the company had unusual items boosting profit by S$296k, in the last year, probably goes some way to explain why its accrual ratio was so weak. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
An Unusual Tax Situation
Moving on from the accrual ratio, we note that Grand Banks Yachts profited from a tax benefit which contributed S$1.1m to profit. This is of course a bit out of the ordinary, given it is more common for companies to be paying tax than receiving tax benefits! We're sure the company was pleased with its tax benefit. However, the devil in the detail is that these kind of benefits only impact in the year they are booked, and are often one-off in nature. Assuming the tax benefit is not repeated every year, we could see its profitability drop noticeably, all else being equal.
Our Take On Grand Banks Yachts' Profit Performance
In conclusion, Grand Banks Yachts' weak accrual ratio suggests its statutory earnings have been inflated by the non-cash tax benefit and the boost it received from unusual items. For all the reasons mentioned above, we think that, at a glance, Grand Banks Yachts' statutory profits could be considered to be low quality, because they are likely to give investors an overly positive impression of the company. If you'd like to know more about Grand Banks Yachts as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 4 warning signs (3 make us uncomfortable!) that you ought to be aware of before buying any shares in Grand Banks Yachts.
Our examination of Grand Banks Yachts has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. 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. 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.
在宣佈疲軟的收益後,大銀行遊艇有限公司的(新加坡證券交易所股票代碼:G50)股票表現強勁。儘管市場反應積極,但我們認為有幾個令人擔憂的因素值得投資者注意。
查看我們對Grand Banks遊艇的最新分析
新加坡交易所:G50收益和收入歷史2022年9月5日
放大Grand Banks遊艇的收益
在高端金融領域,衡量一家公司將報告利潤轉換為自由現金流(FCF)的程度的關鍵比率是應計比率(來自現金流)。為了得到應計比率,我們首先從一個時期的利潤中減去FCF,然後用這個數字除以該時期的平均運營資產。你可以把來自現金流的應計比率看作是‘非FCF利潤率’。
這意味着負的應計比率是一件好事,因為它表明該公司帶來的自由現金流比其利潤所暗示的要多。雖然應計比率高於零並不令人擔憂,但我們確實認為,當一家公司的應計比率相對較高時,這一點值得注意。這是因為一些學術研究表明,高應計制比率往往會導致較低的利潤或較低的利潤增長。
在截至2022年6月的一年中,Grand Banks遊艇的應計比率為0.47。從統計上講,這對未來的收益是一個真正的負面影響。換句話説,該公司在那段時間沒有產生一分錢的自由現金流。在過去的12個月裏,它實際上有負面自由現金流,儘管其利潤為401萬新元,但仍流出820萬新元。值得注意的是,Grand Banks遊艇一年前產生了3700萬新元的正FCF,所以至少他們過去做到了。然而,我們可以看到,最近的一項税收優惠,以及不尋常的項目,影響了其法定利潤,從而影響了其應計比率。對股東來説,好消息是Grand Banks Yachts去年的應計比率要好得多,因此今年的糟糕讀數可能只是利潤和FCF短期錯配的一個例子。因此,一些股東可能希望在本年度實現更強勁的現金轉換。
注:我們總是建議投資者檢查資產負債表的實力。點擊此處查看我們對Grand Banks遊艇的資產負債表分析。
異常項目對利潤的影響
該公司去年有一些不尋常的項目將利潤提高了29.6萬新元,這一事實可能在某種程度上解釋了為什麼它的應計比率如此疲軟。我們不能否認,更高的利潤通常會讓我們保持樂觀,但如果利潤是可持續的,我們更願意這樣做。當我們分析全球絕大多數上市公司時,我們發現重大的不尋常項目往往不會重複。考慮到這些提振被描述為“不尋常的”,這正如你所預期的那樣。假設這些不同尋常的項目在本年度不會再次出現,我們因此預計明年的利潤會更弱(也就是説,在沒有業務增長的情況下)。
不同尋常的税務情況
從應計比率來看,我們注意到Grand Banks遊艇受益於一項税收優惠,為利潤貢獻了110萬新元。這當然有點不尋常,因為公司交税比享受税收優惠更常見!我們確信該公司對其税收優惠感到滿意。然而,細節中的魔鬼是,這些福利只在預訂的那一年影響,而且往往是一次性的。假設税收優惠不是每年重複,我們可以看到,在其他條件不變的情況下,其盈利能力顯著下降。
我們對Grand Banks遊艇盈利表現的看法
總而言之,Grand Banks Yachts疲弱的應計比率表明,其法定收益受到了非現金税收優惠和不尋常項目提振的誇大。基於上述所有原因,我們認為,乍一看,Grand Banks遊艇的法定利潤可以被認為是低質量的,因為它們可能會給投資者帶來對公司過於積極的印象。如果你想更多地瞭解Grand Banks遊艇作為一項業務,意識到它面臨的任何風險是很重要的。為了幫助解決這個問題,我們發現4個警示標誌(3讓我們感到不舒服!)在購買Grand Banks Yachts的任何股票之前,你應該意識到這一點。
我們對Grand Banks遊艇的審查集中在某些因素上,這些因素可能會讓它的收益看起來比實際情況更好。在此基礎上,我們對此持懷疑態度。但如果你有能力將注意力集中在細枝末節上,總會有更多的東西需要發現。例如,許多人認為高股本回報率是有利的商業經濟指標,而另一些人則喜歡“跟着錢走”,尋找內部人士正在買入的股票。所以你可能想看看這個免費擁有高股本回報率的公司的集合,或內部人士正在購買的這份股票清單。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。