We Think Joban KosanLtd's (TSE:9675) Profit Is Only A Baseline For What They Can Achieve

Even though Joban Kosan Co.,Ltd.'s (TSE:9675) recent earnings release was robust, the market didn't seem to notice. Investors are probably missing some underlying factors which are encouraging for the future of the company.

Check out our latest analysis for Joban KosanLtd

The Impact Of Unusual Items On Profit

For anyone who wants to understand Joban KosanLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥282m due 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. 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 Joban KosanLtd 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 Joban KosanLtd.

Our Take On Joban KosanLtd's Profit Performance

Because unusual items detracted from Joban KosanLtd's 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 Joban KosanLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 45% in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Joban KosanLtd as a business, it's important to be aware of any risks it's facing. Be aware that Joban KosanLtd is showing 3 warning signs in our investment analysis and 1 of those shouldn't be ignored...

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