We Think You Should Be Aware Of Some Concerning Factors In Neo Cremar's (KOSDAQ:311390) Earnings

Neo Cremar Co., Ltd.'s (KOSDAQ:311390) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

See our latest analysis for Neo Cremar

The Impact Of Unusual Items On Profit

To properly understand Neo Cremar's profit results, we need to consider the ₩304m gain attributed to unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If Neo Cremar 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 Neo Cremar.

Our Take On Neo Cremar's Profit Performance

We'd posit that Neo Cremar's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Neo Cremar's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 18% EPS growth in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Neo Cremar, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Neo Cremar you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Neo Cremar'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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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