Ashimori Industry's (TSE:3526) Soft Earnings Are Actually Better Than They Appear

The most recent earnings report from Ashimori Industry Co., Ltd. (TSE:3526) was disappointing for shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand Ashimori Industry's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥801m 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 that's hardly a surprise given these line items are considered unusual. If Ashimori Industry doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ashimori Industry.

Our Take On Ashimori Industry's Profit Performance

Unusual items (expenses) detracted from Ashimori Industry's earnings over the last year, but we might see an improvement next year. Because of this, we think Ashimori Industry's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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. For example - Ashimori Industry has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Ashimori Industry's 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.