The Strong Earnings Posted By LuckLand (TSE:9612) Are A Good Indication Of The Strength Of The Business

LuckLand Co., Ltd.'s (TSE:9612) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.

Check out our latest analysis for LuckLand

The Impact Of Unusual Items On Profit

Importantly, our data indicates that LuckLand's profit was reduced by JP¥800m, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. LuckLand took a rather significant hit from unusual items in the year to June 2024. 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 LuckLand.

Our Take On LuckLand's Profit Performance

As we discussed above, we think the significant unusual expense will make LuckLand's statutory profit lower than it would otherwise have been. Because of this, we think LuckLand's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Furthermore, it has done a great job growing EPS 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'd like to know more about LuckLand as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for LuckLand and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of LuckLand's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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.