Maruzen Showa Unyu's (TSE:9068) Solid Profits Have Weak Fundamentals

Maruzen Showa Unyu Co., Ltd.'s (TSE:9068) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

See our latest analysis for Maruzen Showa Unyu

The Impact Of Unusual Items On Profit

For anyone who wants to understand Maruzen Showa Unyu's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from JP¥1.3b worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. If Maruzen Showa Unyu doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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 Maruzen Showa Unyu's Profit Performance

Arguably, Maruzen Showa Unyu's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Maruzen Showa Unyu's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 46% over the last three years. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Maruzen Showa Unyu, and understanding this should be part of your investment process.

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