Cheryong IndustrialLtd's (KOSDAQ:147830) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Investors were disappointed by Cheryong Industrial Co.,Ltd.'s (KOSDAQ:147830 ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

See our latest analysis for Cheryong IndustrialLtd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Cheryong IndustrialLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩1.2b worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. We can see that Cheryong IndustrialLtd's positive unusual items were quite significant relative to its profit in the year to March 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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

Our Take On Cheryong IndustrialLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes Cheryong IndustrialLtd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Cheryong IndustrialLtd's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over 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. If you'd like to know more about Cheryong IndustrialLtd as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 4 warning signs for Cheryong IndustrialLtd you should be mindful of and 1 of these bad boys is significant.

Today we've zoomed in on a single data point to better understand the nature of Cheryong IndustrialLtd'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 with significant insider holdings 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.