We Think You Can Look Beyond Synergy Innovation's (KOSDAQ:048870) Lackluster Earnings

Shareholders appeared unconcerned with Synergy Innovation Co., Ltd.'s (KOSDAQ:048870) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for Synergy Innovation

How Do Unusual Items Influence Profit?

For anyone who wants to understand Synergy Innovation's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩8.8b due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Synergy Innovation took a rather significant hit from unusual items in the year to September 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

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

Our Take On Synergy Innovation's Profit Performance

As we mentioned previously, the Synergy Innovation's profit was hampered by unusual items in the last year. Because of this, we think Synergy Innovation's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over 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 Synergy Innovation, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Synergy Innovation, and understanding them should be part of your investment process.

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