We Think Hyundai Wia's (KRX:011210) Solid Earnings Are Understated

The market seemed underwhelmed by last week's earnings announcement from Hyundai Wia Corporation (KRX:011210) despite the healthy numbers. We did some digging, and we think that investors are missing some encouraging factors in the underlying numbers.

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The Impact Of Unusual Items On Profit

For anyone who wants to understand Hyundai Wia's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩21b due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. If Hyundai Wia doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming 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 Hyundai Wia's Profit Performance

Unusual items (expenses) detracted from Hyundai Wia's earnings over the last year, but we might see an improvement next year. Because of this, we think Hyundai Wia's earnings potential is at least as good as it seems, and maybe even better! 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. Ultimately, this article has formed an opinion based on historical data. However, it can also be great to think about 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 Hyundai Wia'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.

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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.