The Strong Earnings Posted By YUMEMITSUKETAILtd (TSE:2673) Are A Good Indication Of The Strength Of The Business

Even though YUMEMITSUKETAI Co.,Ltd.'s (TSE:2673) recent earnings release was robust, the market didn't seem to notice. We think that investors have missed some encouraging factors underlying the profit figures.

Check out our latest analysis for YUMEMITSUKETAILtd

How Do Unusual Items Influence Profit?

To properly understand YUMEMITSUKETAILtd's profit results, we need to consider the JP¥17m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If YUMEMITSUKETAILtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On YUMEMITSUKETAILtd's Profit Performance

Unusual items (expenses) detracted from YUMEMITSUKETAILtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that YUMEMITSUKETAILtd's statutory profit actually understates its earnings potential! Furthermore, it has done a great job growing EPS over the last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 2 warning signs for YUMEMITSUKETAILtd (of which 1 is potentially serious!) you should know about.

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