The market seemed underwhelmed by the solid earnings posted by AGC Inc. (TSE:5201) recently. We have done some analysis, and found some encouraging factors that we believe the shareholders should consider.
See our latest analysis for AGC
How Do Unusual Items Influence Profit?
Importantly, our data indicates that AGC's profit was reduced by JP¥13b, 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. If AGC 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 AGC's Profit Performance
Unusual items (expenses) detracted from AGC's earnings over the last year, but we might see an improvement next year. Because of this, we think AGC's earnings potential is at least as good as it seems, and maybe even better! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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'd like to know more about AGC as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for AGC you should know about.
Today we've zoomed in on a single data point to better understand the nature of AGC'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. 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.
About TSE:5201
AGC
Manufactures and sells glass, automotive, electronics, chemicals, and ceramics worldwide.
Flawless balance sheet and undervalued.
