Why DaiwaLtd's (TSE:8247) Shaky Earnings Are Just The Beginning Of Its Problems

A lackluster earnings announcement from Daiwa Co.,Ltd. (TSE:8247) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.

We've discovered 4 warning signs about DaiwaLtd. View them for free.

The Impact Of Unusual Items On Profit

For anyone who wants to understand DaiwaLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from JP¥48m worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. DaiwaLtd had a rather significant contribution from unusual items relative to its profit to February 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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

Our Take On DaiwaLtd's Profit Performance

As previously mentioned, DaiwaLtd's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that DaiwaLtd's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. 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. For example, DaiwaLtd has 4 warning signs (and 1 which is concerning) we think you should know about.

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