Does Woorison F&G's (KOSDAQ:073560) Statutory Profit Adequately Reflect Its Underlying Profit?

As a general rule, we think profitable companies are less risky than companies that lose money. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. In this article, we'll look at how useful this year's statutory profit is, when analysing Woorison F&G (KOSDAQ:073560).

While Woorison F&G was able to generate revenue of ₩229.1b in the last twelve months, we think its profit result of ₩8.90b was more important. The chart below shows how it has grown revenue over the last three years, but that profit has declined.

View our latest analysis for Woorison F&G

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will focus on the impact unusual items have had on Woorison F&G's statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Woorison F&G.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Woorison F&G's profit was reduced by ₩3.1b, 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. Assuming those unusual expenses don't come up again, we'd therefore expect Woorison F&G to produce a higher profit next year, all else being equal.

Our Take On Woorison F&G's Profit Performance

Because unusual items detracted from Woorison F&G'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 Woorison F&G's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. To that end, you should learn about the 4 warning signs we've spotted with Woorison F&G (including 2 which can't be ignored).

This note has only looked at a single factor that sheds light on the nature of Woorison F&G'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. 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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