We Think Tenmaya Store's (TSE:9846) Profit Is Only A Baseline For What They Can Achieve

Tenmaya Store Co., Ltd. (TSE:9846) just reported healthy earnings but the stock price didn't move much. We think that investors have missed some encouraging factors underlying the profit figures.

Check out our latest analysis for Tenmaya Store

How Do Unusual Items Influence Profit?

For anyone who wants to understand Tenmaya Store's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥528m due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Tenmaya Store to produce a higher profit next year, all else being equal.

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

Our Take On Tenmaya Store's Profit Performance

Unusual items (expenses) detracted from Tenmaya Store's earnings over the last year, but we might see an improvement next year. Because of this, we think Tenmaya Store's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 50% annually, over the last three years. 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 Tenmaya Store, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with Tenmaya Store (including 1 which is a bit unpleasant).

This note has only looked at a single factor that sheds light on the nature of Tenmaya Store'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 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.