Are Sangsin Energy Display PrecisionLtd's (KOSDAQ:091580) Statutory Earnings A Good Reflection Of Its Earnings Potential?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. Today we'll focus on whether this year's statutory profits are a good guide to understanding Sangsin Energy Display PrecisionLtd (KOSDAQ:091580).

It's good to see that over the last twelve months Sangsin Energy Display PrecisionLtd made a profit of ₩5.68b on revenue of ₩149.2b. In the chart below, you can see that its profit and revenue have both grown over the last three years.

See our latest analysis for Sangsin Energy Display PrecisionLtd

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will discuss how unusual items have impacted Sangsin Energy Display PrecisionLtd's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sangsin Energy Display PrecisionLtd.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Sangsin Energy Display PrecisionLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩2.4b 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. If Sangsin Energy Display PrecisionLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Sangsin Energy Display PrecisionLtd's Profit Performance

Because unusual items detracted from Sangsin Energy Display PrecisionLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Sangsin Energy Display PrecisionLtd's statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. 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. If you want to do dive deeper into Sangsin Energy Display PrecisionLtd, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Sangsin Energy Display PrecisionLtd you should know about.

This note has only looked at a single factor that sheds light on the nature of Sangsin Energy Display PrecisionLtd'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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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