Solid Earnings Reflect Yasuda Logistics' (TSE:9324) Strength As A Business

The subdued stock price reaction suggests that Yasuda Logistics Corporation's (TSE:9324) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures.

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How Do Unusual Items Influence Profit?

To properly understand Yasuda Logistics' profit results, we need to consider the JP¥694m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If Yasuda Logistics doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On Yasuda Logistics' Profit Performance

Because unusual items detracted from Yasuda Logistics' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Yasuda Logistics' statutory profit actually understates its earnings potential! And the EPS is up 22% over the last twelve months. 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 Yasuda Logistics as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Yasuda Logistics you should know about.

This note has only looked at a single factor that sheds light on the nature of Yasuda Logistics' 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.