Doesn't seem concerned about weak profits Jilin Science and Technology Co., Ltd. (TWSE:5285) shareholder numbers last week. We believe the soft headline numbers may be offset by some positive fundamentals.
Check out our latest analysis for Jih Lin Technology.
See more of Jih Lin Technology's earnings
One of the key financial ratios used to measure how well a company converts its profit into free cash flow (FCF). Incidence. Simply put, this ratio subtracts his FCF from his net income and divides that number by the company's average operating assets for the period. This ratio indicates how much of a company's profits are not backed by free cash flow.
As a result, a negative accrual rate is positive for the company and a positive accrual rate is negative. This does not suggest that you need to worry about positive accruals, but it is worth noting if the accruals are fairly high. That's because some academic research suggests that high accrual ratios tend to lead to lower profits and lower profit growth rates.
Jih Lin Technology's accrual ratio through December 2023 is -0.14. This indicates that the company's free cash flow significantly exceeds its statutory profit. In fact, over the past 12 months, the company reported free cash flow of NT$698m, significantly higher than the NT$178.6m he reported as profit. Jih Lin Technology's free cash flow has improved over the last year, which is generally good.
Note: Investors are always advised to check the health of a company's balance sheet. Click here to see Jih Lin Technology's balance sheet analysis.
Our Take on Jih Lin Technology's Earnings Performance
Jih Lin Technology's accrual ratios are solid, indicating strong free cash flow, as discussed above. Because of this, we think Jih Lin Technology's earnings potential is at least as good as it seems, if not more. On top of that, earnings per share have grown 28% per year over the last three years. The purpose of this article was to assess how well we can rely on statutory earnings to reflect a company's potential, but there's plenty more to consider. So if you want to dig deeper into this stock, it's important to consider the risks facing this stock. For example, we discovered that two warning signs To get the full picture of Jih Lin Technology, we need to take a closer look.
Today we've focused on a single data point, to get a deeper understanding of the nature of Jih Lin Technology's profits. But there are many other ways to convey your opinion about a company. For example, many people consider a high return on equity to be a sign of good economic conditions, while others like to 'follow the money' and look for stocks that insiders are buying.So you might want to see this free A collection of companies with a high return on equity, or a list of stocks that insiders are buying.
Valuation is complex, but we help make it simple.
Please check it out Ji Lin Technology Could be overvalued or undervalued, check out our comprehensive analysis. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
