We Like Stanley Electric's (TSE:6923) Earnings For More Than Just Statutory Profit

Stanley Electric Co., Ltd.'s (TSE:6923) recent earnings report didn't offer any surprises, with the shares unchanged over the last week. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

View our latest analysis for Stanley Electric

The Impact Of Unusual Items On Profit

For anyone who wants to understand Stanley Electric's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥5.0b due 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. If Stanley Electric doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 Stanley Electric's Profit Performance

Unusual items (expenses) detracted from Stanley Electric's earnings over the last year, but we might see an improvement next year. Because of this, we think Stanley Electric'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 14% per year 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. If you'd like to know more about Stanley Electric as a business, it's important to be aware of any risks it's facing. For example - Stanley Electric 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 Stanley Electric'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.