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Wall Street JournalKeisei Electric Railway's (TSE:9009) Anemic Earnings Might Be Worse Than You Think
The subdued market reaction suggests that Keisei Electric Railway Co., Ltd.'s (TSE:9009) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.
The Impact Of Unusual Items On Profit
To properly understand Keisei Electric Railway's profit results, we need to consider the JP¥39b gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Keisei Electric Railway's positive unusual items were quite significant relative to its profit in the year to March 2025. 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 Keisei Electric Railway's Profit Performance
As we discussed above, we think the significant positive unusual item makes Keisei Electric Railway's earnings a poor guide to its underlying profitability. For this reason, we think that Keisei Electric Railway's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. In further bad news, its earnings per share decreased in the last year. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To help with this, we've discovered 3 warning signs (2 don't sit too well with us!) that you ought to be aware of before buying any shares in Keisei Electric Railway.
This note has only looked at a single factor that sheds light on the nature of Keisei Electric Railway'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. 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.