Are Samyung Trading's (KRX:002810) Statutory Earnings A Good Reflection Of Its Earnings Potential?

Statistically speaking, it is less risky to invest in profitable companies than in unprofitable ones. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. Today we'll focus on whether this year's statutory profits are a good guide to understanding Samyung Trading (KRX:002810).

While Samyung Trading was able to generate revenue of ₩370.6b in the last twelve months, we think its profit result of ₩32.3b was more important. In the chart below, you can see that its profit and revenue have both grown over the last three years, although its profit has slipped in the last twelve months.

Check out our latest analysis for Samyung Trading

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will focus on the impact unusual items have had on Samyung Trading's statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Samyung Trading.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Samyung Trading's profit was reduced by ₩2.0b, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Samyung Trading to produce a higher profit next year, all else being equal.

Our Take On Samyung Trading's Profit Performance

Unusual items (expenses) detracted from Samyung Trading's earnings over the last year, but we might see an improvement next year. Because of this, we think Samyung Trading's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 12% annually, 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. If you'd like to know more about Samyung Trading as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Samyung Trading you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Samyung Trading'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 that insiders are buying.

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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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