Iljin ElectricLtd (KRX:103590) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Iljin Electric Co.,Ltd's (KRX:103590) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.

See our latest analysis for Iljin ElectricLtd

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Iljin ElectricLtd's profit received a boost of ₩1.4b in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. If Iljin ElectricLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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

Our Take On Iljin ElectricLtd's Profit Performance

Arguably, Iljin ElectricLtd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Iljin ElectricLtd's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 31% EPS growth in the 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Be aware that Iljin ElectricLtd is showing 3 warning signs in our investment analysis and 2 of those are a bit unpleasant...

This note has only looked at a single factor that sheds light on the nature of Iljin ElectricLtd's profit. But there are plenty of other ways to inform your opinion of a company. 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 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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