ODK Solutions Company's (TSE:3839) Solid Earnings Are Supported By Other Strong Factors

ODK Solutions Company, Ltd. (TSE:3839) 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.

View our latest analysis for ODK Solutions Company

How Do Unusual Items Influence Profit?

To properly understand ODK Solutions Company's profit results, we need to consider the JP¥200m expense attributed 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect ODK Solutions Company 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 ODK Solutions Company.

Our Take On ODK Solutions Company's Profit Performance

Because unusual items detracted from ODK Solutions Company'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 ODK Solutions Company'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 14% 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 3 warning signs for ODK Solutions Company (of which 1 is concerning!) you should know about.

This note has only looked at a single factor that sheds light on the nature of ODK Solutions Company's profit. But there are plenty of other ways to inform your opinion of a company. 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. 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 that insiders are buying 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.