Why Able C&C's (KRX:078520) Earnings Are Better Than They Seem

Despite posting healthy earnings, Able C&C Co., Ltd.'s (KRX:078520 ) stock has been quite weak. Along with the solid headline numbers, we think that investors have some reasons for optimism.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Able C&C's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩4.9b due to unusual items. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Able C&C 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 Able C&C.

Our Take On Able C&C's Profit Performance

Because unusual items detracted from Able C&C'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 Able C&C's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. 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. If you want to do dive deeper into Able C&C, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Able C&C and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of Able C&C'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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.