HyosungONBCo.Ltd's (KOSDAQ:097870) Profits May Not Reveal Underlying Issues

The recent earnings posted by HyosungONBCo.,Ltd (KOSDAQ:097870) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

Check out our latest analysis for HyosungONBCo.Ltd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that HyosungONBCo.Ltd's profit received a boost of ₩515m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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

Our Take On HyosungONBCo.Ltd's Profit Performance

Arguably, HyosungONBCo.Ltd's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that HyosungONBCo.Ltd's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. 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. 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. In terms of investment risks, we've identified 1 warning sign with HyosungONBCo.Ltd, and understanding it should be part of your investment process.

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