Investors Can Find Comfort In Twin Disc's (NASDAQ:TWIN) Earnings Quality
Investors Can Find Comfort In Twin Disc's (NASDAQ:TWIN) Earnings Quality
Soft earnings didn't appear to concern Twin Disc, Incorporated's (NASDAQ:TWIN) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
上周,双环公司(NASDAQ:TWIN)的净利润不佳似乎没有引起股东的担忧。我们认为,一些积极的潜在因素可能正在平衡较软的头条数据。
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Zooming In On Twin Disc's Earnings
关注双环收益
As finance nerds would already know, the accrual ratio from cashflow is a key measure for assessing how well a company's free cash flow (FCF) matches its profit. The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. This ratio tells us how much of a company's profit is not backed by free cashflow.
正如财务控制狂所知,从现金流中的应计比率是评估公司自由现金流(FCF)与其利润匹配程度的关键指标。应计比率从给定期间的FCF中减去利润,并将结果除以公司在该时间内的平均经营资产。该比率告诉我们公司利润中有多少不受自由现金流支持。
Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. While it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking.
因此,当一家公司的应计比率变为负数时,这实际上是一件好事,但如果应计比率是正数,则是一件坏事。虽然应计比率为正数并不是问题,这表明一定程度的非现金利润,但高应计比率被认为是一件坏事,因为它表明纸面利润无法与现金流相匹配。值得注意的是,一些学术证据表明,高应计比率通常是近期利润的一个不好的迹象。
For the year to March 2024, Twin Disc had an accrual ratio of -0.13. That implies it has good cash conversion, and implies that its free cash flow solidly exceeded its profit last year. In fact, it had free cash flow of US$30m in the last year, which was a lot more than its statutory profit of US$10.4m. Notably, Twin Disc had negative free cash flow last year, so the US$30m it produced this year was a welcome improvement.
截至2024年3月份的一年中,双环公司的应计比率为-0.13。这意味着它有良好的现金转换率,并意味着它的自由现金流量去年已经明显高于其利润。事实上,它在过去一年中的自由现金流为3000万美元,远高于其法定利润1040万美元。值得注意的是,去年双环公司的自由现金流为负,因此它在今年产生的3000万美元自由现金流是非常受欢迎的改善。
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Twin Disc.
注意:我们始终建议投资者检查资产负债表的实力。点击此处,可以进行双环公司资产负债表的分析。
Our Take On Twin Disc's Profit Performance
我们对双环公司的利润表现的看法
As we discussed above, Twin Disc has perfectly satisfactory free cash flow relative to profit. Based on this observation, we consider it likely that Twin Disc's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. Just as investors must consider earnings, it is also important to take into account the strength of a company's balance sheet. We've done some analysis and you can see our take on Twin Disc's balance sheet by clicking here.
如上所述,相对于利润,双环公司的自由现金流非常令人满意。基于这一观察结果,我们认为双环公司的法定利润实际上低估了其盈利潜力!不幸的是,尽管如此,它的每股收益在过去一年中实际上已经下降。归根结底,如果您想充分了解公司,必须综合考虑以上因素以外的其他因素。投资者必须考虑盈利,同时也要考虑公司资产负债表的实力。我们进行了一些分析,您可以通过点击此处查看我们对双环公司资产负债表的分析。
Today we've zoomed in on a single data point to better understand the nature of Twin Disc'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.
今天,我们放大了一个数据点,以更好地理解双环公司的利润性质。然而,如果您能够集中心思考微观因素,总有更多的发现。例如,许多人认为高股本回报率是有利的商业经济的指标,而其他人则喜欢“跟随资金”并寻找外部人员正在购买的股票。虽然您可能需要进行一些研究,但您可能会发现这些公司的免费收藏具有高股本回报率,或这些正在内部购买的股票清单是有用的。
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