The Strong Earnings Posted By ActBlue (SZSE:300816) Are A Good Indication Of The Strength Of The Business

ActBlue Co., Ltd.'s (SZSE:300816) earnings announcement last week was disappointing for investors, despite the decent profit numbers. We have done some analysis and have found some comforting factors beneath the profit numbers.

Check out our latest analysis for ActBlue

The Impact Of Unusual Items On Profit

For anyone who wants to understand ActBlue's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥28m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect ActBlue to produce a higher profit next year, all else being equal.

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 ActBlue's Profit Performance

Because unusual items detracted from ActBlue'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 ActBlue's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about ActBlue as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for ActBlue you should know about.

Today we've zoomed in on a single data point to better understand the nature of ActBlue's 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.