We Like Tokyo Electric Power Company Holdings' (TSE:9501) Earnings For More Than Just Statutory Profit

Tokyo Electric Power Company Holdings, Incorporated's (TSE:9501) solid earnings announcement recently didn't do much to the stock price. Our analysis suggests that shareholders might be missing some positive underlying factors in the earnings report.

See our latest analysis for Tokyo Electric Power Company Holdings

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Tokyo Electric Power Company Holdings' profit was reduced by JP¥123b, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. In the twelve months to March 2024, Tokyo Electric Power Company Holdings had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker 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 Tokyo Electric Power Company Holdings' Profit Performance

As we discussed above, we think the significant unusual expense will make Tokyo Electric Power Company Holdings' statutory profit lower than it would otherwise have been. Because of this, we think Tokyo Electric Power Company Holdings' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. 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. 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. Our analysis shows 3 warning signs for Tokyo Electric Power Company Holdings (2 are significant!) and we strongly recommend you look at these before investing.

Today we've zoomed in on a single data point to better understand the nature of Tokyo Electric Power Company Holdings' 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 that insiders are buying.

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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.