Hyundai Everdigm's (KOSDAQ:041440) Soft Earnings Are Actually Better Than They Appear

The market was pleased with the recent earnings report from Hyundai Everdigm Corp. (KOSDAQ:041440), despite the profit numbers being soft. However, we think the company is showing some signs that things are more promising than they seem.

View our latest analysis for Hyundai Everdigm

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hyundai Everdigm's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩2.1b 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. Assuming those unusual expenses don't come up again, we'd therefore expect Hyundai Everdigm 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 Hyundai Everdigm.

Our Take On Hyundai Everdigm's Profit Performance

Because unusual items detracted from Hyundai Everdigm'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 Hyundai Everdigm'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. To that end, you should learn about the 5 warning signs we've spotted with Hyundai Everdigm (including 1 which can't be ignored).

This note has only looked at a single factor that sheds light on the nature of Hyundai Everdigm'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.