Niraku GC Holdings' (HKG:1245) Solid Earnings Are Supported By Other Strong Factors

Niraku GC Holdings, Inc.'s (HKG:1245) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Niraku GC Holdings' profit was reduced by JP¥458m, due to unusual items, over the last year. 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 Niraku GC Holdings to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Niraku GC Holdings.

Our Take On Niraku GC Holdings' Profit Performance

Because unusual items detracted from Niraku GC Holdings' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Niraku GC Holdings' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share increased by 63% in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Niraku GC Holdings.

This note has only looked at a single factor that sheds light on the nature of Niraku GC Holdings' profit. 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.