Fuji Oozx's (TSE:7299) Solid Earnings Are Supported By Other Strong Factors

Even though Fuji Oozx Inc. (TSE:7299 ) posted strong earnings, investors appeared to be underwhelmed. We did some digging and actually think they are being unnecessarily pessimistic.

Check out our latest analysis for Fuji Oozx

How Do Unusual Items Influence Profit?

For anyone who wants to understand Fuji Oozx's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥197m 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. 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 Fuji Oozx 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 Fuji Oozx.

Our Take On Fuji Oozx's Profit Performance

Because unusual items detracted from Fuji Oozx's 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 Fuji Oozx's statutory profit actually understates its earnings potential! And the EPS is up 72% 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. So while earnings quality is important, it's equally important to consider the risks facing Fuji Oozx at this point in time. For example - Fuji Oozx has 2 warning signs we think you should be aware of.

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