Solid Earnings Reflect ISB's (TSE:9702) Strength As A Business

Even though ISB Corporation's (TSE:9702) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

See our latest analysis for ISB

How Do Unusual Items Influence Profit?

Importantly, our data indicates that ISB's profit was reduced by JP¥342m, 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, after all, that's exactly what the accounting terminology implies. If ISB 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 ISB.

Our Take On ISB's Profit Performance

Unusual items (expenses) detracted from ISB's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that ISB's statutory profit actually understates its earnings potential! And the EPS is up 56% annually, over the last three years. 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 ISB, you'd also look into what risks it is currently facing. For example - ISB has 1 warning sign we think you should be aware of.

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