HD Hyundai Construction Equipment's (KRX:267270) Soft Earnings Are Actually Better Than They Appear

The market was pleased with the recent earnings report from HD Hyundai Construction Equipment Co., LTD. (KRX:267270), despite the profit numbers being soft. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

View our latest analysis for HD Hyundai Construction Equipment

The Impact Of Unusual Items On Profit

For anyone who wants to understand HD Hyundai Construction Equipment's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩51b due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect HD Hyundai Construction Equipment to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On HD Hyundai Construction Equipment's Profit Performance

Because unusual items detracted from HD Hyundai Construction Equipment'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 HD Hyundai Construction Equipment's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of HD Hyundai Construction Equipment.

Today we've zoomed in on a single data point to better understand the nature of HD Hyundai Construction Equipment'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 with high insider ownership.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.