Weak Statutory Earnings May Not Tell The Whole Story For Yomeishu SeizoLtd (TSE:2540)

Yomeishu Seizo Co.,Ltd.'s (TSE:2540) recent weak earnings report didn't cause a big stock movement. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

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The Impact Of Unusual Items On Profit

For anyone who wants to understand Yomeishu SeizoLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from JP¥348m worth of 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Yomeishu SeizoLtd had a rather significant contribution from unusual items relative to its profit to March 2025. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

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

Our Take On Yomeishu SeizoLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Yomeishu SeizoLtd's earnings a poor guide to its underlying profitability. For this reason, we think that Yomeishu SeizoLtd's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. Sadly, its EPS was down over the last twelve months. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Yomeishu SeizoLtd 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 Yomeishu SeizoLtd'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. 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.