There May Be Underlying Issues With The Quality Of Ono Sokki's (TSE:6858) Earnings

Despite posting some strong earnings, the market for Ono Sokki Co., Ltd.'s (TSE:6858) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

We've discovered 3 warning signs about Ono Sokki. View them for free.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Ono Sokki's profit received a boost of JP¥1.8b 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 crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. We can see that Ono Sokki's positive unusual items were quite significant relative to its profit in the year to March 2025. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Ono Sokki.

Our Take On Ono Sokki's Profit Performance

As we discussed above, we think the significant positive unusual item makes Ono Sokki's earnings a poor guide to its underlying profitability. For this reason, we think that Ono Sokki's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 3 warning signs for Ono Sokki and we think they deserve your attention.

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