Seoho ElectricLtd's (KOSDAQ:065710) Earnings Are Weaker Than They Seem

Seoho Electric Co.,Ltd (KOSDAQ:065710) announced strong profits, but the stock was stagnant. Our analysis suggests that shareholders have noticed something concerning in the numbers.

See our latest analysis for Seoho ElectricLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Seoho ElectricLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩2.5b worth of 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Seoho ElectricLtd.

Our Take On Seoho ElectricLtd's Profit Performance

Arguably, Seoho ElectricLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Seoho ElectricLtd's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 2 warning signs for Seoho ElectricLtd you should be aware of.

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