TAKAYOSHI Holdings' (TSE:9259) Soft Earnings Don't Show The Whole Picture

TAKAYOSHI Holdings, INC.'s (TSE:9259) stock was strong despite it releasing a soft earnings report last week. However, we think the company is showing some signs that things are more promising than they seem.

See our latest analysis for TAKAYOSHI Holdings

How Do Unusual Items Influence Profit?

Importantly, our data indicates that TAKAYOSHI Holdings' profit was reduced by JP¥136m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If TAKAYOSHI Holdings doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 TAKAYOSHI Holdings' Profit Performance

Unusual items (expenses) detracted from TAKAYOSHI Holdings' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that TAKAYOSHI Holdings' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing TAKAYOSHI Holdings at this point in time. For example - TAKAYOSHI Holdings has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of TAKAYOSHI Holdings' 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.

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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.