Shareholders Will Be Pleased With The Quality of Univance's (TSE:7254) Earnings

Univance Corporation (TSE:7254) recently posted some strong earnings, and the market responded positively. We have done some analysis, and we found several positive factors beyond the profit numbers.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Univance's profit was reduced by JP¥471m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Univance 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 Univance.

Our Take On Univance's Profit Performance

Because unusual items detracted from Univance's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Univance's 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 66% 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 want to do dive deeper into Univance, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Univance and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Univance's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.