There May Be Reason For Hope In Fujicco's (TSE:2908) Disappointing Earnings

Soft earnings didn't appear to concern Fujicco Co., Ltd.'s (TSE:2908) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for Fujicco

How Do Unusual Items Influence Profit?

For anyone who wants to understand Fujicco's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥205m 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 Fujicco doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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 Fujicco's Profit Performance

Unusual items (expenses) detracted from Fujicco's earnings over the last year, but we might see an improvement next year. Because of this, we think Fujicco's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing Fujicco at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Fujicco.

Today we've zoomed in on a single data point to better understand the nature of Fujicco'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. 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.