Makiya's (TSE:9890) Solid Earnings Are Supported By Other Strong Factors

Even though Makiya Co., Ltd. (TSE:9890 ) posted strong earnings, investors appeared to be underwhelmed. Our analysis says that investors should be optimistic, as the strong profit is built on solid foundations.

Check out our latest analysis for Makiya

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Makiya's profit was reduced by JP¥282m, 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, after all, that's exactly what the accounting terminology implies. If Makiya 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 Makiya.

Our Take On Makiya's Profit Performance

Because unusual items detracted from Makiya's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Makiya's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share increased by 22% in 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. If you'd like to know more about Makiya as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Makiya and you'll want to know about it.

Today we've zoomed in on a single data point to better understand the nature of Makiya's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. 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.