There May Be Reason For Hope In SNT Motiv's (KRX:064960) Disappointing Earnings

The market for SNT Motiv Co., Ltd.'s (KRX:064960) shares didn't move much after it posted weak earnings recently. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

View our latest analysis for SNT Motiv

How Do Unusual Items Influence Profit?

For anyone who wants to understand SNT Motiv's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩11b 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 SNT Motiv 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 SNT Motiv's Profit Performance

Unusual items (expenses) detracted from SNT Motiv's earnings over the last year, but we might see an improvement next year. Because of this, we think SNT Motiv's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 11% annually, over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So while earnings quality is important, it's equally important to consider the risks facing SNT Motiv at this point in time. In terms of investment risks, we've identified 1 warning sign with SNT Motiv, and understanding this should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of SNT Motiv's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.