Computer Institute of Japan's (TSE:4826) Soft Earnings Don't Show The Whole Picture

Soft earnings didn't appear to concern Computer Institute of Japan, Ltd.'s (TSE:4826) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for Computer Institute of Japan

How Do Unusual Items Influence Profit?

For anyone who wants to understand Computer Institute of Japan's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by JP¥302m due 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 Computer Institute of Japan 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 Computer Institute of Japan.

Our Take On Computer Institute of Japan's Profit Performance

Because unusual items detracted from Computer Institute of Japan'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 Computer Institute of Japan's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 13% annually, over the last three years. 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. While earnings are important, another area to consider is the balance sheet. We've done some analysis and you can see our take on Computer Institute of Japan's balance sheet by clicking here.

This note has only looked at a single factor that sheds light on the nature of Computer Institute of Japan'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.