Stock Analysis

Why Mitsui O.S.K. Lines' (TSE:9104) Shaky Earnings Are Just The Beginning Of Its Problems

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A lackluster earnings announcement from Mitsui O.S.K. Lines, Ltd. (TSE:9104) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

Check out our latest analysis for Mitsui O.S.K. Lines

TSE:9104 Earnings and Revenue History May 7th 2024

The Impact Of Unusual Items On Profit

For anyone who wants to understand Mitsui O.S.K. Lines' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from JP¥36b 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. We can see that Mitsui O.S.K. Lines' positive unusual items were quite significant relative to its profit in the year to March 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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 Mitsui O.S.K. Lines' Profit Performance

As we discussed above, we think the significant positive unusual item makes Mitsui O.S.K. Lines' earnings a poor guide to its underlying profitability. For this reason, we think that Mitsui O.S.K. Lines' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Mitsui O.S.K. Lines as a business, it's important to be aware of any risks it's facing. Be aware that Mitsui O.S.K. Lines is showing 4 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable...

Today we've zoomed in on a single data point to better understand the nature of Mitsui O.S.K. Lines' 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 that insiders are buying to be useful.

Valuation is complex, but we're helping make it simple.

Find out whether Mitsui O.S.K. Lines is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.