Investors are Dongcheng Travel Holding Co., Ltd. (HKG:780) Recently. We did some analysis and found some reassurances beneath the profit numbers.
Check out our latest analysis for Tongcheng Travel Holdings.
Examination of cash flow for earnings of Tojo Travel Holding Co., Ltd.
One of the key financial ratios used to measure how well a company converts its profits into free cash flow (FCF). Incidence. To find the accrual rate, first subtract his FCF from the period's earnings, then divide that number by the period's average operating assets. This ratio indicates how much of a company's profits are not backed by free cash flow.
So a negative accrual rate is a good thing. That's because it shows that a company is bringing in more free cash flow than profit. Although an accrual ratio greater than zero is rarely a problem, it may be considered noteworthy if a company has a relatively high accrual ratio. That's because some academic research suggests that high accrual ratios tend to lead to lower profits and lower profit growth rates.
For the year ending December 2023, Tongcheng Travel Holdings had an accrual ratio of -0.14. Therefore, its statutory earnings are significantly less than its free cash flow. In fact, its free cash flow last year was CA$3.2b, far higher than its statutory profit of CA$1.55b. Given that Tongcheng Travel Holdings had negative free cash flow in the same period last year, his performance of CA$3.2b after 12 months seems to be a step in the right direction.
With that in mind, you might wonder what analysts are predicting 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 Tongcheng Travel Holdings' profit performance
Tongcheng Travel Holdings' accrual ratios are solid, indicating strong free cash flow, as discussed above. So we think Tongcheng Travel Holdings' earnings potential is at least as good, if not more, than it seems. And we can see that there is definitely a positive side to the fact that despite making a loss last year, it made a profit this year. Of course, we've only just scratched the surface when it comes to analyzing earnings. You can also consider profit margins, growth projections, and return on investment, among other factors. When analyzing a stock, keep in mind that it's worth being aware of the risks involved. After analysis, we found that Tongcheng Travel Holdings has the following characteristics. 1 warning sign And it would be unwise to ignore it.
Today we've focused on a single data point, to get a deeper understanding of the nature of Tongcheng Travel Holdings's profits. But there are many other ways to communicate 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.
Check out our comprehensive analysis to see if Tongcheng Travel Holdings is potentially overvalued or undervalued. 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.
