Some Investors May Be Willing To Look Past Allied Farmers' (NZSE:ALF) Soft Earnings

Simply Wall St.10-06

Shareholders appeared unconcerned with Allied Farmers Limited's (NZSE:ALF) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business...

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Our analysis suggests that while the profits are soft, the foundations of the business...</p>\n\n<a href=\"https://simplywall.st/stocks/nz/food-beverage-tobacco/nzx-alf/allied-farmers-shares/news/some-investors-may-be-willing-to-look-past-allied-farmers-nz\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Some Investors May Be Willing To Look Past Allied Farmers' (NZSE:ALF) Soft Earnings</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSome Investors May Be Willing To Look Past Allied Farmers' (NZSE:ALF) Soft Earnings\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-10-06 11:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/nz/food-beverage-tobacco/nzx-alf/allied-farmers-shares/news/some-investors-may-be-willing-to-look-past-allied-farmers-nz><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Shareholders appeared unconcerned with Allied Farmers Limited's (NZSE:ALF) lackluster earnings report last week.  Our analysis suggests that while the profits are soft, the foundations of the business...</p>\n\n<a href=\"https://simplywall.st/stocks/nz/food-beverage-tobacco/nzx-alf/allied-farmers-shares/news/some-investors-may-be-willing-to-look-past-allied-farmers-nz\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"ISBC","symbol_name":"投资者银行","start_time":0,"source_url":"https://simplywall.st/stocks/nz/food-beverage-tobacco/nzx-alf/allied-farmers-shares/news/some-investors-may-be-willing-to-look-past-allied-farmers-nz","article_id":"2573710116","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/5121000-choice1-main-header/1585186829794"],"rights":{"source":"simplywall_highlight","url":"https://simplywall.st/stocks/nz/food-beverage-tobacco/nzx-alf/allied-farmers-shares/news/some-investors-may-be-willing-to-look-past-allied-farmers-nz","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2573710116","pubTimestamp":1759722094,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Shareholders appeared unconcerned with Allied Farmers Limited's ( NZSE:ALF ) lackluster earnings report last week. Our...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"ISBC":"投资者银行","ALF.NZ":"Allied Farmers Limited (NS) Ordinary Shares","ALF":"Centurion Acquisition Corp"},"translate_title":"一些投资者可能愿意忽略Allied Farmers(NZSE：ALF)的疲软盈利","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ALF.NZ":1.5,"ALF":1.5,"ISBC":1.5},"content_text":"Shareholders appeared unconcerned with Allied Farmers Limited's (NZSE:ALF) lackluster earnings report last week.  Our analysis suggests that while the profits are soft, the foundations of the business are strong.    Trump has pledged to \"unleash\" American oil and gas and these 15 US stocks have developments that are poised to benefit.NZSE:ALF Earnings and Revenue History October 6th 2025 Advertisement A Closer Look At Allied Farmers' Earnings  One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period.  This ratio tells us how much of a company's profit is not backed by free cashflow.  As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative.  While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio.  Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking.  Allied Farmers has an accrual ratio of -0.17 for the year to June 2025.   That indicates that its free cash flow quite significantly exceeded its statutory profit.    To wit, it produced free cash flow of NZ$6.8m during the period, dwarfing its reported profit of NZ$2.87m.    Allied Farmers shareholders are no doubt pleased that free cash flow improved over the last twelve months.     However, that's not all there is to consider.  We can see that unusual items have impacted its statutory profit, and therefore the accrual ratio.    Check out our latest analysis for Allied Farmers  Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Allied Farmers.  The Impact Of Unusual Items On Profit  Surprisingly, given Allied Farmers' accrual ratio implied strong cash conversion, its paper profit was actually boosted by NZ$1.0m in unusual items.   While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm.  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.   Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).    Our Take On Allied Farmers' Profit Performance In conclusion, Allied Farmers' accrual ratio suggests its statutory earnings are of good quality, but on the other hand the profits were boosted by unusual items.       Considering the aforementioned, we think that Allied Farmers' profits are probably a reasonable reflection of its underlying profitability; although we'd be confident in that conclusion if we saw a cleaner set of results.      So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing.    At Simply Wall St, we found 3 warning signs for Allied Farmers and we think they deserve your attention.   In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business.   But there are plenty of other ways to inform your opinion of a company.  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.  New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.11","shortVersion":"4.35.11","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2573710116","isCrawlerRequest":true}