There May Be Reason For Hope In DRGEM's (KOSDAQ:263690) Disappointing Earnings

Soft earnings didn't appear to concern DRGEM Corporation's (KOSDAQ:263690) shareholders over the last week. We did some digging, and we believe the earnings are stronger than they seem.

View our latest analysis for DRGEM

The Impact Of Unusual Items On Profit

For anyone who wants to understand DRGEM's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩999m 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. 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. If DRGEM doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On DRGEM's Profit Performance

Because unusual items detracted from DRGEM's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think DRGEM's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 19% annually, over the last three years. 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. At Simply Wall St, we found 2 warning signs for DRGEM and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of DRGEM's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.