Consumer Durables News

Some Investors May Be Willing To Look Past TCM Group’s (CPH:TCM) Soft Earnings


TCM Group A/S’ (CPH:TCM) earnings announcement last week didn’t impress shareholders. However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

Our analysis indicates that TCM is potentially undervalued!

CPSE:TCM Earnings and Revenue History November 23rd 2022

The Impact Of Unusual Items On Profit

For anyone who wants to understand TCM Group’s profit beyond the statutory numbers, it’s important to note that during the last twelve months statutory profit was reduced by kr.15m 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 TCM Group 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 TCM Group’s Profit Performance

Because unusual items detracted from TCM Group’s earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that TCM Group’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. In light of this, if you’d like to do more analysis on the company, it’s vital to be informed of the risks involved. Our analysis shows 5 warning signs for TCM Group (2 make us uncomfortable!) and we strongly recommend you look at them before investing.

This note has only looked at a single factor that sheds light on the nature of TCM Group’s profit. But there are plenty of other ways to inform your opinion of a company. 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.

Valuation is complex, but we’re helping make it simple.

Find out whether TCM Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.



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