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ACT Energy Technologies Ltd. (TSE:ACX) announced a healthy earnings result recently, and the market rewarded it with a strong uplift in the stock price. Looking deeper at the numbers, we found several encouraging factors beyond the headline profit numbers.
Check out our latest analysis for ACT Energy Technologies
The Impact Of Unusual Items On Profit
For anyone who wants to understand ACT Energy Technologies' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CA$10m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If ACT Energy Technologies doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On ACT Energy Technologies' Profit Performance
Unusual items (expenses) detracted from ACT Energy Technologies' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that ACT Energy Technologies' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about ACT Energy Technologies as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with ACT Energy Technologies, and understanding these should be part of your investment process.
This note has only looked at a single factor that sheds light on the nature of ACT Energy Technologies' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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 with significant insider holdings to be useful.
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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.