Fukuyama Transporting's (TSE:9075) Anemic Earnings Might Be Worse Than You Think

Investors were disappointed by Fukuyama Transporting Co., Ltd.'s (TSE:9075 ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

See our latest analysis for Fukuyama Transporting

The Impact Of Unusual Items On Profit

For anyone who wants to understand Fukuyama Transporting's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from JP¥2.2b worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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 Fukuyama Transporting's Profit Performance

We'd posit that Fukuyama Transporting's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Therefore, it seems possible to us that Fukuyama Transporting's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. If you want to do dive deeper into Fukuyama Transporting, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Fukuyama Transporting and you'll want to know about these.

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