Kook Soon Dang.Co.Ltd's (KOSDAQ:043650) Shareholders May Want To Dig Deeper Than Statutory Profit

The recent earnings posted by Kook Soon Dang.Co.,Ltd. (KOSDAQ:043650) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

See our latest analysis for Kook Soon Dang.Co.Ltd

How Do Unusual Items Influence Profit?

For anyone who wants to understand Kook Soon Dang.Co.Ltd's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩2.4b worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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 that's as you'd expect, given these boosts are described as 'unusual'. We can see that Kook Soon Dang.Co.Ltd's positive unusual items were quite significant relative to its profit in the year to March 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Kook Soon Dang.Co.Ltd.

Our Take On Kook Soon Dang.Co.Ltd's Profit Performance

As previously mentioned, Kook Soon Dang.Co.Ltd's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Kook Soon Dang.Co.Ltd's underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 4 warning signs for Kook Soon Dang.Co.Ltd (1 is concerning!) that we believe deserve your full attention.

This note has only looked at a single factor that sheds light on the nature of Kook Soon Dang.Co.Ltd'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 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.