Scinex's (TSE:2376) Earnings Are Weaker Than They Seem

Scinex Corporation's (TSE:2376) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

View our latest analysis for Scinex

How Do Unusual Items Influence Profit?

For anyone who wants to understand Scinex's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from JP¥52m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. If Scinex doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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

Our Take On Scinex's Profit Performance

Arguably, Scinex's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Scinex's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 62% per annum growth in EPS for the last three. 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'd like to know more about Scinex as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Scinex you should be aware of.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.