The market for Yamaha Corporation's (TSE:7951) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
Check out our latest analysis for Yamaha
The Impact Of Unusual Items On Profit
To properly understand Yamaha's profit results, we need to consider the JP¥4.6b expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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 Yamaha to produce a higher profit next year, all else being equal.
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 Yamaha's Profit Performance
Unusual items (expenses) detracted from Yamaha's earnings over the last year, but we might see an improvement next year. Because of this, we think Yamaha's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 16% annually, over the last three years. 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 want to do dive deeper into Yamaha, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Yamaha has 1 warning sign and it would be unwise to ignore it.
This note has only looked at a single factor that sheds light on the nature of Yamaha'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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
About TSE:7951
Yamaha
Engages in the musical instruments, audio equipment, and other businesses in Japan and internationally.
Flawless balance sheet average dividend payer.
