Shareholders Will Be Pleased With The Quality of Daelim BathLtd's (KRX:005750) Earnings

Daelim Bath Co.,Ltd.'s (KRX:005750) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Daelim BathLtd's profit was reduced by ₩1.7b, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. If Daelim BathLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On Daelim BathLtd's Profit Performance

Because unusual items detracted from Daelim BathLtd'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 Daelim BathLtd's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. 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 while earnings quality is important, it's equally important to consider the risks facing Daelim BathLtd at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Daelim BathLtd.

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