Huvitz's (KOSDAQ:065510) Soft Earnings Don't Show The Whole Picture

Shareholders appeared unconcerned with Huvitz Co., Ltd.'s (KOSDAQ:065510) lackluster earnings report last week. We did some digging, and we believe the earnings are stronger than they seem.

Check out our latest analysis for Huvitz

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Huvitz's profit was reduced by ₩4.9b, 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. 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. If Huvitz doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Huvitz's Profit Performance

Because unusual items detracted from Huvitz'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 Huvitz's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. If you'd like to know more about Huvitz as a business, it's important to be aware of any risks it's facing. For example - Huvitz has 4 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Huvitz'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 that insiders are buying 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.