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

The subdued stock price reaction suggests that Daelim B&Co Co.,Ltd.'s (KRX:005750) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures.

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The Impact Of Unusual Items On Profit

For anyone who wants to understand Daelim B&CoLtd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩1.7b due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. Assuming those unusual expenses don't come up again, we'd therefore expect Daelim B&CoLtd to produce a higher profit next year, all else being equal.

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

Our Take On Daelim B&CoLtd's Profit Performance

Because unusual items detracted from Daelim B&CoLtd'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 B&CoLtd's statutory profit actually understates its earnings potential! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 3 warning signs for Daelim B&CoLtd and you'll want to know about them.

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