Ocean System's (TSE:3096) Solid Earnings Are Supported By Other Strong Factors

Even though Ocean System Corporation's (TSE:3096) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

See our latest analysis for Ocean System

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Ocean System's profit was reduced by JP¥195m, 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 that's hardly a surprise given these line items are considered unusual. If Ocean System doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On Ocean System's Profit Performance

Unusual items (expenses) detracted from Ocean System's earnings over the last year, but we might see an improvement next year. Because of this, we think Ocean System's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 62% 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'd like to know more about Ocean System as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Ocean System you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Ocean System'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 with significant insider holdings to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.