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.
在宣布疲软的收益后,大银行游艇有限公司的(新加坡证券交易所股票代码:G50)股票表现强劲。尽管市场反应积极,但我们认为有几个令人担忧的因素值得投资者注意。
查看我们对Grand Banks游艇的最新分析
新加坡交易所:G50收益和收入历史2022年9月5日
放大Grand Banks游艇的收益
在高端金融领域,衡量一家公司将报告利润转换为自由现金流(FCF)的程度的关键比率是应计比率(来自现金流)。为了得到应计比率,我们首先从一个时期的利润中减去FCF,然后用这个数字除以该时期的平均运营资产。你可以把来自现金流的应计比率看作是‘非FCF利润率’。
这意味着负的应计比率是一件好事,因为它表明该公司带来的自由现金流比其利润所暗示的要多。虽然应计比率高于零并不令人担忧,但我们确实认为,当一家公司的应计比率相对较高时,这一点值得注意。这是因为一些学术研究表明,高应计制比率往往会导致较低的利润或较低的利润增长。
在截至2022年6月的一年中,Grand Banks游艇的应计比率为0.47。从统计上讲,这对未来的收益是一个真正的负面影响。换句话说,该公司在那段时间没有产生一分钱的自由现金流。在过去的12个月里,它实际上有负面自由现金流,尽管其利润为401万新元,但仍流出820万新元。值得注意的是,Grand Banks游艇一年前产生了3700万新元的正FCF,所以至少他们过去做到了。然而,我们可以看到,最近的一项税收优惠,以及不寻常的项目,影响了其法定利润,从而影响了其应计比率。对股东来说,好消息是Grand Banks Yachts去年的应计比率要好得多,因此今年的糟糕读数可能只是利润和FCF短期错配的一个例子。因此,一些股东可能希望在本年度实现更强劲的现金转换。
注:我们总是建议投资者检查资产负债表的实力。点击此处查看我们对Grand Banks游艇的资产负债表分析。
异常项目对利润的影响
该公司去年有一些不寻常的项目将利润提高了29.6万新元,这一事实可能在某种程度上解释了为什么它的应计比率如此疲软。我们不能否认,更高的利润通常会让我们保持乐观,但如果利润是可持续的,我们更愿意这样做。当我们分析全球绝大多数上市公司时,我们发现重大的不寻常项目往往不会重复。考虑到这些提振被描述为“不寻常的”,这正如你所预期的那样。假设这些不同寻常的项目在本年度不会再次出现,我们因此预计明年的利润会更弱(也就是说,在没有业务增长的情况下)。
不同寻常的税务情况
从应计比率来看,我们注意到Grand Banks游艇受益于一项税收优惠,为利润贡献了110万新元。这当然有点不寻常,因为公司交税比享受税收优惠更常见!我们确信该公司对其税收优惠感到满意。然而,细节中的魔鬼是,这些福利只在预订的那一年影响,而且往往是一次性的。假设税收优惠不是每年重复,我们可以看到,在其他条件不变的情况下,其盈利能力显著下降。
我们对Grand Banks游艇盈利表现的看法
总而言之,Grand Banks Yachts疲弱的应计比率表明,其法定收益受到了非现金税收优惠和不寻常项目提振的夸大。基于上述所有原因,我们认为,乍一看,Grand Banks游艇的法定利润可以被认为是低质量的,因为它们可能会给投资者带来对公司过于积极的印象。如果你想更多地了解Grand Banks游艇作为一项业务,意识到它面临的任何风险是很重要的。为了帮助解决这个问题,我们发现4个警示标志(3让我们感到不舒服!)在购买Grand Banks Yachts的任何股票之前,你应该意识到这一点。
我们对Grand Banks游艇的审查集中在某些因素上,这些因素可能会让它的收益看起来比实际情况更好。在此基础上,我们对此持怀疑态度。但如果你有能力将注意力集中在细枝末节上,总会有更多的东西需要发现。例如,许多人认为高股本回报率是有利的商业经济指标,而另一些人则喜欢“跟着钱走”,寻找内部人士正在买入的股票。所以你可能想看看这个免费拥有高股本回报率的公司的集合,或内部人士正在购买的这份股票清单。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。