Are Broadcasting System of Niigata's (TYO:9408) Statutory Earnings A Good Reflection Of Its Earnings Potential?

Statistically speaking, it is less risky to invest in profitable companies than in unprofitable ones. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. This article will consider whether Broadcasting System of Niigata's (TYO:9408) statutory profits are a good guide to its underlying earnings.

We like the fact that Broadcasting System of Niigata made a profit of JP¥335.0m on its revenue of JP¥19.9b, in the last year. In the last few years both its revenue and its profit have fallen, as you can see in the chart below.

Check out our latest analysis for Broadcasting System of Niigata

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Broadcasting System of Niigata's statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Broadcasting System of Niigata.

The Impact Of Unusual Items On Profit

To properly understand Broadcasting System of Niigata's profit results, we need to consider the JP¥226m expense attributed to unusual items. 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 that's hardly a surprise given these line items are considered unusual. If Broadcasting System of Niigata doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Broadcasting System of Niigata's Profit Performance

Because unusual items detracted from Broadcasting System of Niigata'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 Broadcasting System of Niigata's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. So while earnings quality is important, it's equally important to consider the risks facing Broadcasting System of Niigata at this point in time. To that end, you should learn about the 4 warning signs we've spotted with Broadcasting System of Niigata (including 1 which doesn't sit too well with us).

Today we've zoomed in on a single data point to better understand the nature of Broadcasting System of Niigata'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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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