Stock Analysis

Some Investors May Be Willing To Look Past NIHON CHOUZAILtd's (TSE:3341) Soft Earnings

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Investors were disappointed with the weak earnings posted by NIHON CHOUZAI Co.,Ltd. (TSE:3341 ). However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

Check out our latest analysis for NIHON CHOUZAILtd

TSE:3341 Earnings and Revenue History May 7th 2024

The Impact Of Unusual Items On Profit

Importantly, our data indicates that NIHON CHOUZAILtd's profit was reduced by JP¥4.3b, 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. NIHON CHOUZAILtd took a rather significant hit from unusual items in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

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 NIHON CHOUZAILtd's Profit Performance

As we discussed above, we think the significant unusual expense will make NIHON CHOUZAILtd's statutory profit lower than it would otherwise have been. Because of this, we think NIHON CHOUZAILtd's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! On the other hand, its EPS actually shrunk in the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into NIHON CHOUZAILtd, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 4 warning signs for NIHON CHOUZAILtd and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of NIHON CHOUZAILtd'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether NIHON CHOUZAILtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.