There May Be Reason For Hope In Okumura's (TSE:1833) Disappointing Earnings

Shareholders appeared unconcerned with Okumura Corporation's (TSE:1833) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

We've discovered 4 warning signs about Okumura. View them for free.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Okumura's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥11b due 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 that's hardly a surprise given these line items are considered unusual. In the twelve months to March 2025, Okumura had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Okumura.

Our Take On Okumura's Profit Performance

As we mentioned previously, the Okumura's profit was hampered by unusual items in the last year. Because of this, we think Okumura's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Okumura, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 4 warning signs for Okumura (of which 2 are concerning!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Okumura's profit. But there are plenty of other ways to inform your opinion of a company. 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.