Nihon Nohyaku's (TSE:4997) Earnings Seem To Be Promising

The market seemed underwhelmed by last week's earnings announcement from Nihon Nohyaku Co., Ltd. (TSE:4997) despite the healthy numbers. We did some analysis to find out why and believe that investors might be missing some encouraging factors contained in the earnings.

Check out our latest analysis for Nihon Nohyaku

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Nihon Nohyaku's profit was reduced by JP¥1.4b, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. If Nihon Nohyaku 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 Nihon Nohyaku's Profit Performance

Because unusual items detracted from Nihon Nohyaku'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 Nihon Nohyaku's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 10% annually, over the last three years. 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. If you want to do dive deeper into Nihon Nohyaku, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Nihon Nohyaku.

This note has only looked at a single factor that sheds light on the nature of Nihon Nohyaku'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.