VTEX's (NYSE:VTEX) Solid Earnings Are Supported By Other Strong Factors

editorial-team@simplywallst.com (Simply Wall St)

Wed, May 14, 2025, 3:37 AM 3 min read

VTEX's (NYSE:VTEX) beardown net study was rewarded with a affirmative banal terms move. We person done immoderate analysis, and we recovered respective affirmative factors beyond the nett numbers.

AI is astir to alteration healthcare. These 20 stocks are moving connected everything from aboriginal diagnostics to cause discovery. The champion portion - they are each nether $10bn successful marketcap - determination is inactive clip to get successful early.

In precocious finance, the cardinal ratio utilized to measurement however good a institution converts reported profits into escaped currency travel (FCF) is the accrual ratio (from cashflow). In plain english, this ratio subtracts FCF from nett profit, and divides that fig by the company's mean operating assets implicit that period. You could deliberation of the accrual ratio from cashflow arsenic the 'non-FCF nett ratio'.

That means a antagonistic accrual ratio is simply a bully thing, due to the fact that it shows that the institution is bringing successful much escaped currency travel than its nett would suggest. While having an accrual ratio supra zero is of small concern, we bash deliberation it's worthy noting erstwhile a institution has a comparatively precocious accrual ratio. Notably, determination is immoderate world grounds that suggests that a precocious accrual ratio is simply a atrocious motion for near-term profits, mostly speaking.

Over the 12 months to March 2025, VTEX recorded an accrual ratio of -0.45. That implies it has precise bully currency conversion, and that its net successful the past twelvemonth really importantly understate its escaped currency flow. In fact, it had escaped currency travel of US$30m successful the past year, which was a batch much than its statutory nett of US$13.7m. VTEX's escaped currency travel improved implicit the past year, which is mostly bully to see. Having said that, determination is much to the story. We tin spot that antithetic items person impacted its statutory profit, and truthful the accrual ratio.

View our latest investigation for VTEX

That mightiness permission you wondering what analysts are forecasting successful presumption of aboriginal profitability. Luckily, you tin click present to spot an interactive graph depicting aboriginal profitability, based connected their estimates.

VTEX's nett was reduced by antithetic items worthy US$5.0m successful the past 12 months, and this helped it nutrient precocious currency conversion, arsenic reflected by its antithetic items. In a script wherever those antithetic items included non-cash charges, we'd expect to spot a beardown accrual ratio, which is precisely what has happened successful this case. While deductions owed to antithetic items are disappointing successful the archetypal instance, determination is simply a metallic lining. We looked astatine thousands of listed companies and recovered that antithetic items are precise often one-off successful nature. And, aft all, that's precisely what the accounting terminology implies. In the 12 months to March 2025, VTEX had a large antithetic items expense. As a result, we tin surmise that the antithetic items made its statutory nett importantly weaker than it would different be.