Shareholders Can Be Confident That Isetan Mitsukoshi Holdings' (TSE:3099) Earnings Are High Quality

Isetan Mitsukoshi Holdings Ltd. (TSE:3099) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

See our latest analysis for Isetan Mitsukoshi Holdings

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Isetan Mitsukoshi Holdings' profit was reduced by JP¥6.7b, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Isetan Mitsukoshi Holdings 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 Isetan Mitsukoshi Holdings' Profit Performance

Unusual items (expenses) detracted from Isetan Mitsukoshi Holdings' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Isetan Mitsukoshi Holdings' statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 72% in the last year. 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. If you want to do dive deeper into Isetan Mitsukoshi Holdings, you'd also look into what risks it is currently facing. To help with this, we've discovered 2 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Isetan Mitsukoshi Holdings.

This note has only looked at a single factor that sheds light on the nature of Isetan Mitsukoshi Holdings' 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.