Hokuetsu's (TSE:3865) Earnings Are Of Questionable Quality

Despite posting some strong earnings, the market for Hokuetsu Corporation's (TSE:3865) stock hasn't moved much. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. TSE:3865 Earnings and Revenue History May 26th 2025 How Do Unusual Items Influence Profit? To properly understand Hokuetsu's profit results, we need to consider the JP¥2.8b gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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 that's as you'd expect, given these boosts are described as 'unusual'. If Hokuetsu doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year. 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 Hokuetsu's Profit Performance Arguably, Hokuetsu's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Hokuetsu's true underlying earnings power is actually less than its statutory profit. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the 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. While it's really important to consider how well a company's statutory earnings represent its true earnings power, it's also worth taking a look at what analysts are forecasting for the future. So feel free to check out our free graph representing analyst forecasts. Today we've zoomed in on a single data point to better understand the nature of Hokuetsu'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. If you're looking to trade Hokuetsu, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.Sponsored Content