We Think Unipres' (TSE:5949) Solid Earnings Are Understated

The stock was sluggish on the back of Unipres Corporation's (TSE:5949) recent earnings report. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.

View our latest analysis for Unipres

The Impact Of Unusual Items On Profit

To properly understand Unipres' profit results, we need to consider the JP¥2.6b expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Unipres 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 Unipres' Profit Performance

Because unusual items detracted from Unipres' 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 Unipres' statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 5.6% in the 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 Unipres as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Unipres you should know about.

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