The Strong Earnings Posted By Matsuya Foods Holdings (TSE:9887) Are A Good Indication Of The Strength Of The Business

Investors were underwhelmed by the solid earnings posted by Matsuya Foods Holdings Co., Ltd. (TSE:9887) recently. We did some digging and actually think they are being unnecessarily pessimistic.

View our latest analysis for Matsuya Foods Holdings

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Matsuya Foods Holdings' profit was reduced by JP¥1.2b, due to unusual items, over the last year. 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 Matsuya Foods Holdings 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 Matsuya Foods Holdings.

Our Take On Matsuya Foods Holdings' Profit Performance

Unusual items (expenses) detracted from Matsuya Foods Holdings' earnings over the last year, but we might see an improvement next year. Because of this, we think Matsuya Foods Holdings' earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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. While earnings are important, another area to consider is the balance sheet. We've done some analysis and you can see our take on Matsuya Foods Holdings' balance sheet by clicking here.

This note has only looked at a single factor that sheds light on the nature of Matsuya Foods Holdings' profit. But there are plenty of other ways to inform your opinion of a company. 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 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.