Daiichi Kigenso Kagaku Kogyo's (TSE:4082) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Last week's earnings announcement from Daiichi Kigenso Kagaku Kogyo Co., Ltd. (TSE:4082) was disappointing to investors, with a sluggish profit figure. Our analysis has found some reasons to be concerned, beyond the weak headline numbers.

Our free stock report includes 2 warning signs investors should be aware of before investing in Daiichi Kigenso Kagaku Kogyo. Read for free now.

How Do Unusual Items Influence Profit?

To properly understand Daiichi Kigenso Kagaku Kogyo's profit results, we need to consider the JP¥957m gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Daiichi Kigenso Kagaku Kogyo 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.

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 Daiichi Kigenso Kagaku Kogyo's Profit Performance

As we discussed above, we think the significant positive unusual item makes Daiichi Kigenso Kagaku Kogyo's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Daiichi Kigenso Kagaku Kogyo's underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 2 warning signs for Daiichi Kigenso Kagaku Kogyo and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of Daiichi Kigenso Kagaku Kogyo'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.