SEOHAN Const. & Eng.co.Ltd's (KOSDAQ:011370) Conservative Accounting Might Explain Soft Earnings

Shareholders appeared unconcerned with SEOHAN Const. & Eng.co.,Ltd's (KOSDAQ:011370) lackluster earnings report last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for SEOHAN Const. & Eng.co.Ltd

How Do Unusual Items Influence Profit?

For anyone who wants to understand SEOHAN Const. & Eng.co.Ltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩3.3b due 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. Assuming those unusual expenses don't come up again, we'd therefore expect SEOHAN Const. & Eng.co.Ltd to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of SEOHAN Const. & Eng.co.Ltd.

Our Take On SEOHAN Const. & Eng.co.Ltd's Profit Performance

Because unusual items detracted from SEOHAN Const. & Eng.co.Ltd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think SEOHAN Const. & Eng.co.Ltd's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 6 warning signs for SEOHAN Const. & Eng.co.Ltd you should be mindful of and 2 of them are a bit concerning.

This note has only looked at a single factor that sheds light on the nature of SEOHAN Const. & Eng.co.Ltd'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. 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 that insiders are buying 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.