RIDE ON EXPRESS HOLDINGS' (TSE:6082) Soft Earnings Don't Show The Whole Picture

The market for RIDE ON EXPRESS HOLDINGS Co., Ltd.'s (TSE:6082) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

We've discovered 1 warning sign about RIDE ON EXPRESS HOLDINGS. View them for free.

The Impact Of Unusual Items On Profit

To properly understand RIDE ON EXPRESS HOLDINGS' profit results, we need to consider the JP¥145m expense attributed 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect RIDE ON EXPRESS HOLDINGS to produce a higher profit next year, all else being equal.

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 RIDE ON EXPRESS HOLDINGS' Profit Performance

Because unusual items detracted from RIDE ON EXPRESS HOLDINGS' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that RIDE ON EXPRESS HOLDINGS' statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - RIDE ON EXPRESS HOLDINGS has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of RIDE ON EXPRESS HOLDINGS' 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.