We Think That There Are Issues Underlying Kyoei Tanker's (TSE:9130) Earnings

Kyoei Tanker Co., Ltd.'s (TSE:9130) robust earnings report didn't manage to move the market for its stock. We did some digging, and we found some concerning factors in the details.

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The Impact Of Unusual Items On Profit

To properly understand Kyoei Tanker's profit results, we need to consider the JP¥6.1b gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. Kyoei Tanker had a rather significant contribution from unusual items relative to its profit to March 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Kyoei Tanker.

Our Take On Kyoei Tanker's Profit Performance

As previously mentioned, Kyoei Tanker's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Kyoei Tanker's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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 want to do dive deeper into Kyoei Tanker, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 4 warning signs for Kyoei Tanker (of which 1 is a bit concerning!) you should know about.

This note has only looked at a single factor that sheds light on the nature of Kyoei Tanker'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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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.