Stock Analysis

Solid Earnings May Not Tell The Whole Story For Ryoyo Ryosan Holdings (TSE:167A)

TSE:167A
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The recent earnings posted by Ryoyo Ryosan Holdings, Inc. (TSE:167A) were solid, but the stock didn't move as much as we expected. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

earnings-and-revenue-history
TSE:167A Earnings and Revenue History May 22nd 2025
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How Do Unusual Items Influence Profit?

Importantly, our data indicates that Ryoyo Ryosan Holdings' profit received a boost of JP¥5.9b in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Ryoyo Ryosan Holdings had a rather significant contribution from unusual items relative to its profit to March 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 Ryoyo Ryosan Holdings.

Our Take On Ryoyo Ryosan Holdings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Ryoyo Ryosan Holdings' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Ryoyo Ryosan Holdings' underlying earnings power is lower than its statutory profit. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Ryoyo Ryosan Holdings.

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