Statutory Profit Doesn't Reflect How Good BIT Computer's (KOSDAQ:032850) Earnings Are

BIT Computer Co., Ltd (KOSDAQ:032850) recently posted some strong earnings, and the market responded positively. We did some digging and found some further encouraging factors that investors will like.

See our latest analysis for BIT Computer

The Impact Of Unusual Items On Profit

Importantly, our data indicates that BIT Computer's profit was reduced by ₩1.1b, 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 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 BIT Computer to produce a higher profit next year, all else being equal.

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

Our Take On BIT Computer's Profit Performance

Unusual items (expenses) detracted from BIT Computer's earnings over the last year, but we might see an improvement next year. Because of this, we think BIT Computer's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 7.5% annually, over the last three years. 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. So while earnings quality is important, it's equally important to consider the risks facing BIT Computer at this point in time. In terms of investment risks, we've identified 1 warning sign with BIT Computer, and understanding this should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of BIT Computer'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. 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.

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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.