SEMITEC's (TSE:6626) Soft Earnings Don't Show The Whole Picture

SEMITEC Corporation's (TSE:6626) recent soft profit numbers didn't appear to worry shareholders, as the stock price showed strength. We think that investors might be looking at some positive factors beyond the earnings numbers.

Check out our latest analysis for SEMITEC

The Impact Of Unusual Items On Profit

To properly understand SEMITEC's profit results, we need to consider the JP¥615m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect SEMITEC to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On SEMITEC's Profit Performance

Unusual items (expenses) detracted from SEMITEC's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that SEMITEC's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 13% per year 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. If you'd like to know more about SEMITEC as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for SEMITEC you should be aware of.

This note has only looked at a single factor that sheds light on the nature of SEMITEC's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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 with significant insider holdings to be useful.

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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.