Statutory Profit Doesn't Reflect How Good Ichishin HoldingsLtd's (TSE:4645) Earnings Are

The subdued stock price reaction suggests that Ichishin Holdings Co.,Ltd.'s (TSE:4645) strong earnings didn't offer any surprises. Investors are probably missing some underlying factors which are encouraging for the future of the company.

Check out our latest analysis for Ichishin HoldingsLtd

The Impact Of Unusual Items On Profit

To properly understand Ichishin HoldingsLtd's profit results, we need to consider the JP¥161m expense attributed to unusual items. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Ichishin HoldingsLtd 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 Ichishin HoldingsLtd.

Our Take On Ichishin HoldingsLtd's Profit Performance

Unusual items (expenses) detracted from Ichishin HoldingsLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Ichishin HoldingsLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 21% in the last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 4 warning signs for Ichishin HoldingsLtd you should be mindful of and 1 of these bad boys is a bit concerning.

Today we've zoomed in on a single data point to better understand the nature of Ichishin HoldingsLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.