Coca-Cola Bottlers Japan Holdings (TSE:2579) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Last week's profit announcement from Coca-Cola Bottlers Japan Holdings Inc. (TSE:2579) was underwhelming for investors, despite headline numbers being robust. Our analysis uncovered some concerning factors that we believe the market might be paying attention to.

Check out our latest analysis for Coca-Cola Bottlers Japan Holdings

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Coca-Cola Bottlers Japan Holdings' profit received a boost of JP¥4.4b in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. 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'. We can see that Coca-Cola Bottlers Japan Holdings' positive unusual items were quite significant relative to its profit in the year to March 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Coca-Cola Bottlers Japan Holdings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Coca-Cola Bottlers Japan Holdings' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Coca-Cola Bottlers Japan Holdings' underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 2 warning signs for Coca-Cola Bottlers Japan Holdings and you'll want to know about these.

Today we've zoomed in on a single data point to better understand the nature of Coca-Cola Bottlers Japan Holdings' 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.