Are Moorim SP's (KOSDAQ:001810) Statutory Earnings A Good Reflection Of Its Earnings Potential?

As a general rule, we think profitable companies are less risky than companies that lose money. That said, the current statutory profit is not always a good guide to a company's underlying profitability. In this article, we'll look at how useful this year's statutory profit is, when analysing Moorim SP (KOSDAQ:001810).

It's good to see that over the last twelve months Moorim SP made a profit of ₩3.09b on revenue of ₩134.8b. In the last few years both its revenue and its profit have fallen, as you can see in the chart below.

View our latest analysis for Moorim SP

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will discuss how unusual items have impacted Moorim SP's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Moorim SP.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Moorim SP's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩1.9b due to unusual items. 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 Moorim SP doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Moorim SP's Profit Performance

Unusual items (expenses) detracted from Moorim SP's earnings over the last year, but we might see an improvement next year. Because of this, we think Moorim SP's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 3 warning signs for Moorim SP you should know about.

This note has only looked at a single factor that sheds light on the nature of Moorim SP'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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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