The market seemed underwhelmed by last week's earnings announcement from Aisin Corporation (TSE:7259) despite the healthy numbers. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.
See our latest analysis for Aisin
The Impact Of Unusual Items On Profit
To properly understand Aisin's profit results, we need to consider the JP¥22b expense attributed to unusual items. 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. If Aisin 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 Aisin's Profit Performance
Because unusual items detracted from Aisin'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 Aisin's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 11% over the last twelve months. 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 Aisin as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Aisin has 1 warning sign and it would be unwise to ignore this.
Today we've zoomed in on a single data point to better understand the nature of Aisin'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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
About TSE:7259
Aisin
Manufactures and sells automotive parts, and energy and lifestyle related products.
Flawless balance sheet with moderate growth potential.
