There May Be Reason For Hope In Mitsui DM SugarLtd's (TSE:2109) Disappointing Earnings

Shareholders appeared unconcerned with Mitsui DM Sugar Co.,Ltd.'s (TSE:2109) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand Mitsui DM SugarLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥4.6b due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Mitsui DM SugarLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Mitsui DM SugarLtd.

Our Take On Mitsui DM SugarLtd's Profit Performance

Because unusual items detracted from Mitsui DM SugarLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Mitsui DM SugarLtd's earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. 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. If you want to do dive deeper into Mitsui DM SugarLtd, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Mitsui DM SugarLtd, and understanding these should be part of your investment process.

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